AThe - Association of Washington Business

Transcription

March 2006
WASHINGTONBUSINESS
MAGAZINE
Volume 5 | Issue 3
6
Feedback
Letters to the Editor
32 Ergonomics
It’s Not the Bogeyman
by Daniel Brunell
8
Ulcer Gulch
A Different Look at Politics
Washington
10 Inside
News from Around the State
Corner
14 Chair’s
by Creigh H. Agnew
Message
16 President’s
by Don C. Brunell
or Play Destroys Jobs
18 Pay
by Richard S. Davis
of View
20 Points
by Jennifer Holder and AWB Staff
Q&A with Steve Hill
22 Administrator,
Basic Health Care Authority
Programs
24 Wellness
by Daniel Brunell
Medicine
26 Evidence-Based
by Ron Dalby
Insurance Market Resurrected
28 Individual
by Paul Schlienz
More of the Uninsured
30 Covering
by Charles Henry Thomas
31 Policy
Bringing Individual Responsibility Back to Health Care
by Paul Schlienz
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WASHINGTONBUSINESS
35 Perspective
GOP Leaders Have Deep Roots in Chambers
Profile
36 Industry
A Tough Bet: Non-Tribal Casinos
Have the Deck Stacked Against Them
by Alexis Nepomuceno
Profile
38 Community
Raymond: Bounty from the Sea
by Shawn Sullivan
in Washington
40 Made
Orange Juice From an Unlikely Source
by Daniel Brunell
42 Technology
Blackberry Alternatives:
A Smart Phone Arms Race
on the Move
43 People
Who’s in the News, Who’s on the Move
Profile
44 Member
Canyon Creek Cabinet Co.
making Fine Wood cabinets the Old-Fashioned Way
by Shawn Sullivan
46 Profile
Gubby Barlow: Premera BlueCross CEO
Bringing Health Care Into the 21st Century
by Shawn Sullivan
About this Issue
Legislators Need a Course in Business 101
H
ealth care continues to be a growing financial burden for
businesses nationwide. In Washington, the issue has exacerbated a troubling situation for job providers who already face the
highest minimum wages, highest unemployment insurance and
among the highest workers’ compensation costs in the country.
The prospects for employers are not eased when they find out the
majority of lawmakers making health care decisions have never run
a business or even worked in private industry.
In this issue of Washington Business, we examine health care from
a number of fronts—all affecting the cost of health insurance for
both employer and employee.
AWB Board Chair Creigh H. Agnew writes about what her
company, Weyerhaeuser, has done to limit cost increases in recent
years. She describes the company’s benefits strategy, which focuses on employees staying healthy, protecting them against catastrophic health care costs and more efficient management of
health care costs.
Washington Research Council President Dick Davis describes
the ongoing battle between labor and Wal-Mart. He analyzes
developments regarding “pay or play” from other states, and sizes
up the situation in Washington.
AWB also talks with with Steve Hill, administrator for the
Washington State Health Care Authority. He describes the agency
and its role, as well as his take on the health care issue and how it
affects the state’s private employers.
In his story on ergonomics, Daniel Brunell explains how focusing on wellness in the workplace can help with a company’s bottom line. He provides a list of ideas companies can use to help
improve the health of their employees.
Other aspects of the health care issue are covered in this issue, as
well. Ron Dalby examines the up-and-coming practice of evidence-based medicine, and Paul Schlienz takes a look at the return
of the individual insurance market.
Legislators are often perplexed when they hear of the doom-andgloom scenarios bantered about by small, medium and large businesses alike. Job providers are perplexed when they bring their
cases before politicians who gaze back at them with looks of befuddlement. That is, until they realize that their elected leaders have
spent most of their lives signing the backs—not the fronts—of
paychecks. Lawmakers need to wake up to the reality that businesses drive the economy that provides the jobs that support their
constituents.
MARCH 2006
5
Letters to the Editor
Biodiesel Not the Answer
to Energy Independence
I strongly support measures to increase
energy independence for the United
States, as well as measures to reduce
greenhouse gas emissions. But biodiesel is
not the answer. More energy (in the form
of fossil fuels) must be used to create
biodiesel than it produces when burned.
Actually, if all of the energy consumed in
the biodiesel process is counted, the energy balance is quite negative. The reality is
that biodiesel is nothing more than a farm
subsidy. It makes us feel good, but it does
nothing to reduce oil imports or to reduce
greenhouse gas emissions.
If we are serious about gaining energy
independence, creating a hydrogen economy, and reducing greenhouse gas emissions, we must find a way to create a base
load of energy production that is not
linked to fossil fuels. The only large-scale
solution on a national scale is reinvesting
in power generation using nuclear energy. Much of the rest of the developed
world is beginning to recognize this reality. The United States, and particularly
Washington state, remain stuck in green
political agendas that will only compound our energy problems and delay
reductions in greenhouse gas emissions.
Jim Miller, PE, LG, LEG, LHG
CEO, Senior Principal /GeoEngineers, Inc.
Redmond, Wash.
Business Should Oppose
Key Arena Renovations
Key Arena was built in 1994 for $92
million, and its debt was to have been
paid with revenue from operations. The
City of Seattle, exercising a certain judgment private business people sometimes
regret using, is now paying on its guaran-
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WASHINGTONBUSINESS
tee of that debt. The problem’s proposed
solution will tear down the building,
move unpaid debt into the future, incur
new debt, and pay it all with taxes from a
different source. That source is you.
This is the Key Arena pro-basketball
tax subsidy. Since the cost is so large relative to the public benefit, we have been
puzzled by the lack of business opposition. Major economists, including Alan
Sanderson at the University of Chicago
and Roger Noll at Stanford, have
debunked the myth of economic development related to professional sports subsidies. Read their comments at www.citizensformoreimportantthings.org.
The Sonics payroll for 16 players is
about $50 million per year. That is the
reason the team is losing money, and that
is why this bailout should strike anyone
who can read a profit-and-loss statement
as nuts. That the Legislature would
authorize indebtedness totaling $270 million to get rid of a $29 million problem—
the debt on Key Arena at the end of the
Sonics lease in 2010—is equally ludicrous.
Polls show voter outrage. City Council
President and former businessperson
Nick Licata has one that says 63 percent
of Seattle voters prefer that the Sonics
leave town if public funds need to be used
to keep them here.
Fortunately, this is an election year. We
believe that any legislative vote in favor of
these taxes will run counter to reason and
this strong current of public opinion.
This current is relatively easy to ply with
powerfully negative messages that can be
used equally well against free market
Republicans or social Democrats.
Members of AWB will hopefully remember this as legislators seek their advice on
this issue, and their support.
Chris Van Dyk/Mark Baerwaldt, Co-Chairs
Citizens for More Important Things
Seattle, Wash.
Send letters to:
Association of
Washington Business
P.O. Box 658
Olympia, WA 98507-0658
Or e-mail them to:
RonD@awb.org
Dutch Education System
Should Be Our Model
I can't believe that a country as big and
important as the United States has a
school system that's so incredibly simple.
I would really encourage you to look at
the school system in the Netherlands, the
country where I was born and raised.
At age 12, students are tested to see at
what level of education they are. There are
many choices and paths for children to
take. Here, in this beautiful and wonderful country, the only choice is middle
school followed by high school. It is a
one-size-fits-all approach.
For example, how about making it possible for students to go to a school which
has levels A, B or C? And future employers will know what this means. An attorney wants to have a secretary with high
school B. A carpenter wants a student
who graduated on level C, and the student who goes to college has to have a
diploma based on level A.
To me, it seems like a wonderful solution. No more WASL and no child will be
left behind. All children can work at their
own level and will be a lot happier. All in
all, everybody will benefit.
Astrid Diek
Stevenson, Wash.
Association of Washington Business
Washington Business Magazine
Publisher . . . . . . . . . . . . . . . . . . . . . . Don C. Brunell
Executive Editor . . . . . . . . . . . . . Alexis Nepomuceno
Editor . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ron Dalby
Managing Editor . . . . . . . . . . . . . . . . . . Paul Schlienz
Art Director . . . . . . . . . . . . . . . . . . . . Kim A. Fowler
Photo Editor . . . . . . . . . . . . . . . . . . . . Daniel Brunell
Copy Editor . . . . . . . . . . . . . . . . . . . . . Bonnie Bollig
Contributing Writers. . . . . . . . . . . . . . Richard Davis
Charles Henry Thomas
Association of
Washington Business
P.O. Box 658
1414 Cherry St. SE
Olympia, WA 98507-0658
Phone: (360) 943-1600
Fax: (360) 943-5811
www.awb.org
AWB Officers
Creigh H. Agnew . . . . . . . . . . . . . .Chair of the Board
Weyerhaeuser, Federal Way
Kirk Nelson . . . . . . . . . . . . . . . . . . . . . . . . Vice Chair
Qwest, Seattle
Brad Carlson . . . . . . . . . . . . . . . . . Secretary/Treasurer
Evergreen Memorial Gardens, Vancouver
Tom Lemly . . . . . . . . . . . . . . . . Immediate Past Chair
Davis Wright Tremaine, Seattle
Don C. Brunell . . . . . . . . . . . . . . . . . . . . . . . President
The late C. David Gordon . . . . . . Honorary President
8537 Corbin Drive, Anchorage, AK 99507
Phone: (907) 562-9300 Fax: (907) 562-9311
info@aqppublishing.com
President . . . . . . . . . . . . . . . . . . . . . . .Robert R. Ulin
Advertising Sales Manager . . . . . . . . .Carl Kingsman
(253) 677-8778
carl.kingsman@aqppublishing.com
ADVISORY BOARD
AWB Senior Staff
Don C. Brunell . . . . . . . . . . . . . . . . . . . . . . . President
Gary Chandler . . . . . . . . . . . VP Governmental Affairs
Debra Brown . . . . . . . . . . . . . Sr. VP Member Services
Alexis Nepomuceno . . . . . . . . . . VP Communications
Dick Walter . . . . . . . . . . . . . . . . . . . . . VP Operations
AWB Governmental Affairs Staff
Amber Carter . . . . . . . Governmental Affairs Director
Kris Tefft . . . . . . . . . . Governmental Affairs Director
Grant Nelson . . . . . . . . Governmental Affairs Director
Mellani McAleenan . . . Governmental Affairs Director
Chris McCabe . . . . . . . Governmental Affairs Director
Shannon Garland . . . . . . . . . . Regulatory Coordinator
G
G
G
G
Editorial Disclaimers
Articles written by outside authors do not necessarily
reflect the views or positions of the Association of Washington
Business (AWB).
Letters to the editor are welcome but must be signed, or be
verifiable, to be considered for publication.
Reproduction of articles from Washington Business Magazine is
authorized by permission, with credit given to AWB.
The advertising of products and services in Washington Business
Magazine does not necessarily represent endorsement of the
product or service, or reflect the opinion of AWB.
AWB's Washington Business Magazine is published every other
month with a subscription price of $24.00 per year. Individual
copies can be purchased for $3.95. Subscription requests and magazine purchases should be made to the Association of Washington
Business, P.O. Box 658, Olympia, WA 98507-0658 or e-mail
AlexisN@awb.org.
MARCH 2006
7
Ulcer Gulch
Tim and Jake Tangle Over Initiatives
Animal Rights Group Calls for Boycott
Sen. Ken Jacobsen, D-Seattle, claims initiatives run by special
interest groups undermine the representative form of government.
He said if initiatives were allowed on a national level, President
Bush could have won re-election while voters passed a measure forcing immediate withdrawal of troops from Iraq. “I think the citizens
would have some sympathy for [increasing legislative pay] if they
saw their legislators listening to their concerns and doing a good
job,” professional initiative backer Tim Eyman responded. “And
when a top legislative priority is taking away the rights of citizens to
participate in the initiative process, they don't want to reward that.”
The Alaska Supreme Court in February denied a request by
Friends of Animals to halt the state’s wolf culling program. The
judges also refused to review the case. The court did not provide
an explanation. “As far as a tourism boycott, which I had called
off, it will be organized again,” Priscilla Feral, president of the
Connecticut-based Friends of Animals, said. “As much as we are
floored to get the news, we are determined to go ahead and keep
working.”
Over the past two years, Friends of Animals has stage hundreds
of demonstrations called “howl-ins” in cities across the country to
protest Alaska's predator-control program, which is intended to
allow moose and caribou to increase in numbers. Some activists
dressed in wolf outfits at the gatherings, and some howled in imitation of wolves to protest the hunts.
Alaska tourism officials say the howl-ins have had little, if any,
effect on the state's $2 billion-a-year tourism industry.
The Olympian, January 27, 2006
Swecker Calls for Full-Time Legislators
“Folks, this is not a part-time job,” said Sen. Dan Swecker, RRochester. “I would like to see the Legislature get more proactive
in getting involved in the nitty-gritty details of running the state.”
Swecker's plan would raise legislators' salaries to the equivalent of
full-time and prohibit them from having outside employment
that would interfere with being a full-time lawmaker.
Union Holdout Loses Her Job
Pat Woodward, a Department of Licensing employee for most of
her 22 years in state service, lost her job in December for not joining the Washington State Federation of Employees. Woodward
said her early retirement means lower benefits. She said she’s
thought about doing something to earn cash in retirement but has
not decided what. “I was in a better position to disagree than most.
Still, it doesn’t feel good to be fired after all those years.”
Home State Senator Knows Best
Sen. Tom Coburn, R-Okla., disparaged an earmark for
Seattle—$500,000 for a sculpture garden—and Sen. Patty
Murray, D-Wash., was scandalized: “We are not going to watch
the senator pick out one project and make it into a whipping
boy.” She invoked the code of comity: “I hope we do not go down
the road deciding we know better than home-state senators about
the merits of the projects they bring to us.” And she warned of
Armageddon: “I tell my colleagues, if we start cutting funding for
individual projects, your project may be next.” But Coburn, who
does not do earmarks, thinks Armageddon sounds like fun.
George Will, The Washington Post, February 12, 2006
8
WASHINGTONBUSINESS
The Seattle Times, February 13, 2006
We Have an Emergency
These are some of the bills this legislative session that have
received emergency clauses:
• SB 6615—Limiting social card games.
• SB 6708—Providing guidelines for the issuance and
renewal of a geoduck diver license and requiring
harvesters to help reseed state commercial beds.
• HB 2419—Revising state ethics laws to allow the
lieutenant governor and staff to fund raise and host the
National Conference of Lieutenant Governors meeting
that was supposed to be in New Orleans this year.
• SB 6661—Establishing the Washington Beer
Commission.
The Evergreen Freedom Foundation, February 6, 2006
AWB
Legislative
Reception
2006
More than 500 AWB members,
legislators and agency
directors attended AWB’s
annual Legislative Reception
held in Olympia on Feb. 8. At
the event, businesses had an
opportunity to network with
one another and meet face-toface with agency directors and
elected officials to discuss
actions that need to be taken
in key issue areas like
unemployment insurance,
workers’ compensation and
health care reform.
AWB
Thank you to the following
sponsors for making this year’s
event a resounding success!
Diamond
Avista Corp.
AWB Agency Services
BP
Burlington Northern and Santa Fe RR
CNA Insurance Companies
Columbia Vista Corp.
Coors Brewing Co.
DaimlerChrysler
Georgia-Pacific Corp.
International Speedway
Kinross Gold USA Inc.
Lane Powell PC
Last Frontier Casino
Mentor Law Group PLLC
Microsoft Corp.
New Phoenix Casino
Nuprecon Inc.
Premera BlueCross
Puget Sound Energy
Qwest
Regence BlueShield
State Farm Insurance Co.
Sterling Savings Bank
The Boeing Co.
Washington Realtors
Wash. State Potato Commission
Western States Petroleum Association
Gold
Alcoa Primary Metals
CenturyTel
Costco Wholesale
Coyne, Jesernig LLC
Harold LeMay Enterprises Inc.
Medco Health Solutions
PEMCO Financial Services
Recreational Gaming Assoc. of Wash.
Simpson Investment Co.
Western Polymer Corp.
Weyerhaeuser Co.
Contributing Sponsor
Printcom Inc.
Silver
AAA Washington
Associated General Contractors of Wash.
Associated Industries of Inland NW
Benton Rural Electric Association
Capitol Strategies
Crane Aerospace-Eldec Corp.
Dick’s Drive-Ins Ltd. LP
Dri-Eaz Products Inc.
Group Health Cooperative
Les Schwab Tire Centers of Wash. Inc.
NW Food Processors Association
Olympia Federal Savings and Loan
Patrick Dunn and Associates Ltd.
Rubatino Refuse Removal Inc.
SDS Lumber Co.
Volt Services Group
Bronze
The Acme Service Group
Bogard and Associates
Boise Cascade LLC
Buse Timber and Sales Inc.
Daniels-Brown Communications
Dynamic Leadership Solutions Group LLC
Evergreen Memorial Gardens Cemetery
Frank Gurney Inc.
Gano and Associates
Hobart Machined Products Inc.
Journal of Business
Millennia Public Affairs Inc.
NuChem Industries
Rainier Connect
Roman Meal Co.
Sakuma Brothers Farms Inc.
Therapeutic Resources Inc.
Toray Composites America Inc.
WashingtonVotes.org
Whiteside Family Mortuaries and
Cascade Cremation Services
Inside Washington
AWB Members Cut Shipping Costs
OLYMPIA—The Association of Washington Business has partnered with several of the nation’s
best service freight carriers to create the AWB Freight Program. Beginning Jan. 16, AWB members will receive a 67 percent discount—minimum—directly off selected carrier’s base rates for
all less-than-truckload shipments. AWB’s partners include Oak Harbor, USF Reddaway,
Overnite Transportation, Watkins Motor Freight and Central Transportation, with more options
available in the future.
Alaska Tries to Grab Washington’s Cutter
WASHINGTON, D.C.—Alaska’s senior senator, Ted Stevens, and its lone congressman, Don
Young, both Republicans, claim the nation’s newest and most advanced icebreaker, the Healy,
should be home-ported in Anchorage instead of Seattle because that’s where the ice is. Besides
being a choice military plum for its home port, the Healy is named for late 19th century Coast
Guard Captain Michael Healy, a local hero up north who garnered considerable fame for his
exploits in Alaskan waters. Efforts to reassign the ship were killed in late February.
Killer Whales Don’t Qualify for Protection, says BIAW
SEATTLE—In late January the Building Industry Association of Washington filed a 60-day
notice of its intent to sue the federal government over the listing of Puget Sound’s orcas as an
endangered species. The BIAW filing claimed that killer whales don’t qualify for federal protection and is worried that the endangered species listing will increase restrictions on property
development and use for lands bordering on the Sound.
Talk of a Full-Time Legislature Quietly Circulating
Courtesy Brent Blake ©2006
OLYMPIA—Legislators get a little nervous when you bring up an idea being pushed by
Republican Sen. Dan Swecker—doubling lawmakers pay to $70,000 a year to free them from
the need for a second job and allow them to concentrate full-time, year-around on their jobs as
legislators. Swecker says he has positive feedback from many of his colleagues but that he thinks
the idea is little more than a means of getting a discussion going this year. He aims for passage
of a suitable bill next year.
Lighting the Lamp for Tourism
SOAP LAKE—The city council has allocated $100,000 in tourism money to install a 50-foottall, 52,000-pound lava lamp. Because people no longer flock to Soap Lake—about midway
between Seattle and Spokane—to take in the mineral waters and coat themselves with healing
mud as in the past, supporters of the lamp, who hope it will be installed by this summer, are
hoping it will help boost tourism.
State Recommends Faster Fix for Unstable Slopes
SNOQUALMIE PASS—A quickly compiled report by the Department of Transportation recommended in late January that work on unstable slopes in the Lake Keechelus area be speeded
up and asked for $50 million bond program to pay for the work. Three sites near milepost 57
and two others near milepost 50 are the most urgent projects and are not otherwise scheduled
to be fixed until 2011.
10
WASHINGTONBUSINESS
Inside Washington
Feds Propose Smaller Salmon Catch, Closing Harmful Hatcheries
PORTLAND—In late January, James Connaughton, chairman of the White House Council on
Environmental Quality, announced at a meeting of salmon scientists that the Bush administration wants to focus on reducing the number of threatened and endangered fish being caught by
U.S. and Canadian fishermen and closing hatcheries that are considered harmful to wild spawners. Conservation groups are split over the merits of the proposal with those opposed suggesting
it is just a means of not having to face up to the possibility of removing four dams on the lower
Snake River.
Counties Team Up for $7.2 Billion Road Plan
SEATTLE—Voters from King, Pierce and Snohomish counties could get to vote later this year
on whether to tax each household as much as an additional $120 a year to provide money for
road improvements. Of the expected $7.2 billion, $4.5 billion would be earmarked to help
replace the Alaskan Way Viaduct and the Evergreen Point Bridge, widen Interstate 405 and State
Route 167, make additional improvements on State Route 18, and help connect Route 509 to
Interstate 5. The remaining $2.7 billion would be spent on projects in Pierce and Snohomish
counties.
Airbus Building North American Plant
MOBILE, Ala.—Airbus, Boeing’s major competitor, began work at the end of January to build
an engineering center. The plant is expected to employ about 150 aerospace engineers doing
design work on Airbus planes. It could, however, grow to include an airplane assembly plant if
Northrup Grumman and EADS North America beat out Boeing in bids to provide aerial-refueling tankers to the U.S. Air Force.
Bremerton Looks to a Wireless Future
BREMERTON—Mayor Cary Bozeman hopes that the city will offer wireless Internet throughout the entire downtown area by the end of this year. Though some local businesses see a citysponsored wireless network as unfair competition, the idea isn’t new and is in fact already operating in cities throughout the country, including some Puget Sound communities. Bozeman
believes turning his entire town into a wireless “hot spot” will help it compete for business.
Job Numbers Climbing at Boeing
EVERETT—Boeing hit a 21st-century low in employee numbers little more than 18 months
ago. Since then, it has added 10,000 workers to its rolls, including more than half of the laidoff machinists and all but five laid-off engineer and 12 laid-off technical workers. In late January,
Boeing’s Web site listed nearly 400 available jobs in Washington.
Unemployment Rate Falls
OLYMPIA—By the end of the year, 17,000 jobless people were dropped from unemployment
rolls and 79,500 new jobs had been created in Washington, reducing the state’s unemployment
rate to 5.3 percent. Nationwide the jobless rate fell to 4.9 percent. Ferry County had the state’s
highest unemployment rate at 10.1 percent and the city of Pullman had the lowest unemployment rate at 3.6 percent.
MARCH 2006
11
Inside Washington
Carlile Opens New Terminal at Port
TACOMA—Carlile Transportation Systems Inc. opened its new Tacoma Port facility in midJanuary, replacing the terminal in Federal Way. “The new state-of-the-art, multi-modal facility
allows Carlile to better serve its Alaska client base and expand into the busy Pacific Northwest
market,” said Linda Leary, Carlile’s vice president of sales. The 16-acre facility includes 50,000
square feet of cross dock and 14,000 square feet of office space with some of the latest technological advances in security.
Sound Transit Could Cost More than Estimated
SEATTLE—A citizens’ panel warned Sound Transit in January that the cost of running its
regional transportation system could rise more than the agency has predicted. Although ridership on buses and trains is up, more riders do not necessarily bring in the revenue to cover
the extra users. The panel believes an 8 to 10 percent growth in annual costs to be realistic.
Using 9 percent as an average, this would mean an additional cost of $360 million in the
next 14 years.
BNSF Railway Honored for International Business
TACOMA—Dennis Johnson, senior vice president of Wells Fargo Bank, which sponsors the
Tacoma Chamber’s George Francis Train International Commemorative, presented
Burlington Northern-Santa Fe Railway with the award on Feb. 2. BNSF is the nation’s second-largest railroad and moves more than 150 trains through Washington each day. BNSF has
been experiencing double-digit growth in all its business units and container imports are
expected to triple over the next two decades.
$2 Million in Workers’ Comp Refunded
OLYMPIA—Manufacturing companies participating in the Association of Washington
Business CompWise retrospective rating program received workers’ compensation refunds totaling more than $2 million in 2005. The program is committed to fewer on-the-job accidents and
to returning injured workers to the workforce in the shortest possible time. This results in a winwin situation for both management and employees. Information on how your company can participate can be found at AWB’s Web site, www.awb.org, or by calling AWB at (800) 521-9325.
AWB Honors Eliason as Top Lobbyist
OLYMPIA—The Association of Washington Business awarded Denny Eliason with
this year’s Ron Gjerde Award for being the year’s top business lobbyist. Eliason is a
very active member of AWB, serving on numerous committees ranging from transportation, workers’ compensation, land use, and tax and fiscal policy. Eliason’s peers
chose him for the AWB’s top lobbying award named in honor of Weyerhaeuser lobbyist Ron Gjerde—who died twelve years ago.
12
WASHINGTONBUSINESS
Inside Washington
Saving Salmon to the Tune of $1.1 Billion
SEATTLE—The latest Puget Sound Salmon Recovery Plan suggests committing $1.1 billion
over the next 10 years in an attempt to make big jumps in Chinook populations throughout
the area. The goal for at least one water shed is a Chinook run more than 50 times the size of
the current run. The plan suggests ripping out riprap, sea walls and various shoreline hardening-features; protecting natural shorelines; creating pools in streams to harbor young salmon;
and much more.
Firm Working on Bigger, Cheaper Silicon Wafers
VANCOUVER — Shinetsu Chemical Co. is investing $1 billion at its facilities in Vancouver
and Japan to make larger silicon wafers for the semiconductor industry. Shinetsu’s American
facility in Vancouver is training 25 people to run a pilot project to produce 12-inch wafers.
Shinetsu is in a worldwide race to increase the wafer size from 8 inches as a way to dramatically cut production costs. Silicon wafers are made from giant crystals grown at the Vancouver facilities and are the basic manufacturing platform for chips used to run computers and cell phones.
Snohomish County Fire Station for Sale
STANWOOD—Fire District No. 4 is selling its old station south of town on eBay. The district
is asking for $715,000 for the two buildings, which have six bays and an acre of land. In the first
four days the station was listed in mid-January, the Web site got more than 10,000 hits, though
no bids had come in.
Schweitzer Wins Top Safety Award and Continues to Grow
PULLMAN—Schweitzer Engineering Laboratories has been
recognized by the Department of Labor and Industries for
achieving excellence in workplace safety and health at its
Pullman headquarters. The manufacturing lab was named a
Voluntary Protection Program STAR work site, the state's
highest honor for comprehensive, successful programs
focused on occupational safety and health. This status is based
on leadership and commitment, extensive employee participation, an ongoing safety and health improvement program,
and successfully passing an L&I audit and extensive on-site
review. SEL joins an exclusive club of only 25 Washington
work sites that have earned VPP recognition.
SEL employs 880 people in Pullman. They design, develop
and manufacture equipment and services to protect, monitor,
control, automate and meter utility and industrial electric
power systems worldwide. The work site's potential hazards
include machinery, electrical, thermal and energy hazards, and
exposure to injuries from lifting, confined spaces, hazardous
noise levels, falls and chemicals. The company devoted significant resources to reducing or eliminating the hazards, resulting in a total case incident rate 44 percent below the national
average for similar industries.
“We would encourage all employers to follow Schweitzer's
example in preventing injuries and illnesses in the workplace,”
said Labor and Industries Director Gary Weeks. “One of our
core missions is to work in partnership with employers and
employees for safer workplaces, and we stand ready to help
them as we balance effective education and outreach with
enforcement, when it's necessary.”
Schweitzer is also constructing two new buildings at its
Pullman site. An 86,000-square-foot office building will
become SEL’s new “front door” and house several divisions of
the company. A 20,000-square-foot event center will provide
expanded meeting space for SEL and will also be available for
rent to the public. When construction is complete, SEL will
have 400,000 square feet under roof in 11 buildings.
MARCH 2006
13
Chair’s Corner
Keeping Your People Healthy
I
CREIGH H. AGNEW
CHAIR
BOARD OF DIRECTORS
Creigh H. Agnew,
a Weyerhaeuser
employee since
1985, was appointed
Weyerhaeuser’s vice
president of
government affairs
and corporate
contributions in
April 1996. She
holds Bachelor’s and
Master’s degrees
from the University
of Washington and is
currently AWB’s
board chair.
14
WASHINGTONBUSINESS
t’s all the buzz. Rising health insurance costs.
employees, retirees and their families. During
In the past few years, double-digit premium
the past few years, costs to Weyerhaeuser have
increases have greeted employers’ health insurincreased an average 12 percent a year, which
ance benefits. As a result, various polls show
is a smaller increase than many other employAmericans are more worried about health care
ers have had to bear.
costs than about losing their jobs or paying for
We’re all aware that escalating health care
rent and mortgages.
costs are straining the state’s budget. The
Research has shown that a steady, multi-year
Legislature has heard from AWB and employers
acceleration in the growth rate of underlying
for years about the need to control the rising
health care costs is largely to blame for increascosts of health care. Unfortunately, our lawes in private health insurance premiums. In
makers have been slow to respond to ideas that
addition, while growth in prescription drug
allow flexibility in designing plans that work for
costs was a major comindividual companies at
ponent of the acceleracosts they can afford; or
tion in health care cost
provide for more competigrowth in the late 1990s,
tion in the insurance marrecent increases in spendket. So what is an employ“Research has shown
ing on hospital care have
er to do?
that a steady, multiaccounted for the largest
I cannot speak for other
portion of cost growth.
businesses,
but here at
year acceleration in
Today, most workers
Weyerhaeuser we have crethe growth rate of
with
employer-sponated a new benefits strategy
sored health coverage are
called “Share the Future.”
underlying health care
required to share the
It’s an innovative strategy
costs of their health
that focuses on encouragcosts is largely to
insurance premiums and
ing employees to stay
blame for increases in
benefits with their
healthy, protects employees
employers. According to
against catastrophic health
private health
the
Kaiser
Family
care costs, and manages
insurance premiums.”
Fo u n d a t i o n / He a l t h
benefit costs efficiently.
Research and EducaWeyerhaeuser’s Share the
tional Trust, in 2004
Future strategy has brought
more than three-quarters
to the company changes
of workers contributed
necessary to maintain comtoward their monthly premiums (93 percent for
petitive and affordable health care benefits for
family coverage and 79 percent for single coveremployees and retirees. We designed new medage). And, higher percentages of workers conical plans, enhanced the network of available
tributed to cost sharing for office visits (97 perproviders, established a company-wide health
cent), and tiered cost sharing for prescription
management program and increased emphasis
drugs (89 percent).
on health care education.
We all have questions about health care costs
Generally, we’ve been successful at managand why they continue to rise. The answers are
ing health care spending for both the company
complicated and too complex to explain in a
and employees compared to national trends.
single issue of Washington Business, let alone in
We have invested in the health of our employthis column. However, two obvious reasons for
ees, retirees and their families. We are helping
rising costs are that we’re all using more health
them become well-educated consumers of
care services than ever before and that these
health care services. Not only does our strateservices are carrying heftier price tags.
gy contain costs, but more importantly, we
At my company, rising health care costs are
hope it will have a positive impact on our
a significant concern for the company,
employee’s quality of life.
President’s Message
A Nation of Grasshoppers?
A
DON C. BRUNELL
AWB PRESIDENT
16
WASHINGTONBUSINESS
s a third grader, our teacher taught us
Æsop’s classic fable, “The Ant and the
Grasshopper,” as one of life’s important lessons.
Remember the grasshopper was lounging in a
field one summer’s day singing and enjoying the
sunshine when he noticed an ant toiling in the
stifling heat to carry a kernel of corn to his nest.
He laughed and called the ant a fool for working so hard. But when winter came, the
grasshopper starved while the ant lived snugly
in its well-stocked nest.
The moral of the story: Work hard, save and
be responsible for yourself.
Today, it seems we in America are more like
grasshoppers than ants. Gone are the days when
everyone did without so they could pay their
bills, put money away for a rainy day, and save
for their retirement.
At least that’s how it seemed as I watched the
parade of big screen plasma televisions and
Seahawks paraphernalia flying out of the stores
in the weeks leading up to the Super Bowl.
Remember, this is after Christmas when the
average person is saddled with debt.
So, how can these folks pay all their bills, put
money away for an emergency, save for their
retirement, and afford to buy all those fancy
electronics and consumer goods?
They can’t. In fact, many struggle just to
cover the minimum payment and interest on
their credit cards.
Americans are spending more and saving less.
According to the U.S. Commerce Department,
consumer spending last December increased at
a rate more than double the rate of income
growth. This buying frenzy helped push the savings rate for the year down to the lowest level
since the Great Depression.
This is especially troubling today, when it is
critical that people think about how they will
support themselves in retirement. As President
Bush said in his State of the Union address, two
of his Dad’s favorite people—him and President
Clinton—are joining a growing wave of
Americans qualifying for retirement starting
this year.
Will they have enough to live on, especially as
our longevity on this planet keeps increasing?
That’s the core question.
When we “baby boomers” were growing up,
our folks emphasized the need to save money
and not spend beyond our means. For example,
my folks took my brother and me to the bank
every month to put half of our paper route
money into savings.
There is the notion in this nation today that
someone else will take care of us—the government, an insurance company or employers. In
reality, like the grasshopper, we are learning that
we must take more responsibility for ourselves
and families.
Many of our legacy companies are struggling
to cope with pension liabilities and health care
benefits for their workers, families and retirees.
For example, Ford Motor Co., which recently
announced it would cut 30,000 jobs by 2012,
has more than $32 billion in unfunded retiree
medical costs. General Motors spends more
than $5 billion a year on employee health benefits, and has more than $60 billion in retiree
health care liabilities.
The car companies are not alone. The
National Association of Manufacturers reports
that while our economy recovered from the
2000-03 recession, profits did not. In fact, profits lagged by 67 percent. Nearly one-quarter of
the profit deterioration was due exclusively to
higher health care and pension costs, which are
particularly troubling for companies with large
retiree populations.
To survive, American employers need to
find ways for people who work for them to
take more of the responsibility for benefits—
particularly pensions and health care. If they
don’t, they will fall to lower-cost foreign competitors and millions of Americans may find
themselves with insufficient health care and
pensions.
In reality we have no choice. We must
become a nation of ants and take responsibility
for ourselves or we will suffer the grasshopper’s
fate. It is a hard, but essential, lesson.
The Columbia-Snake River Irrigators Association
CSRIA Water Management Program
Supported by Battelle Pacific Northwest Laboratory Review
Battelle Pacific Northwest Laboratory researchers are acknowledging the significant water
management benefits of a CSRIA water management proposal for new Columbia-Snake River water
rights and water conservation measures. The proposal is part of an amendment to the state water
code and agency protocol being considered by the state’s legislative and executive leadership.
In a February 2006, Battelle technical review, a team of laboratory fisheries biologists, hydrologists,
and economists found “numerous beneficial features of the proposal notably, a stimulus for applying
[irrigation] best management practices (BMPs), a regional perspective on water management, and an
attempt to articulate trade-offs in water use.” The Battelle review concluded that:
• The proposal provides several methods to encourage and support investment in BMPs and
water conservation.
• The proposal will fund conservation improvements among irrigators and irrigation districts,
with a mitigation fee attached to new mainstem Columbia River water withdrawals.
• The BMP and conservation improvements could result in water savings both in the mainstem
river and tributaries, while allowing for the issuance of new water rights.
• The proposal offers simplicity and transparency for issuing new water rights and providing
funding for water conservation projects.
CSRIA Board representative Darryll Olsen describes the new water management approach as being
“the most significant, and practical step toward issuing new eastern Washington water rights in the
past 25 years.” The application of BMPs, adopting an annual hydropower mitigation fee, and using
this fee to finance water conservation measures in the tributaries will provide for new water
withdrawals and instream flow protection. This approach is crucial to the future of eastern
Washington water management.
The CSRIA, the Quad Cities, and key water providers like the Kennewick Irrigation District are
supporting this proposal, and we strongly encourage our state legislators and Gov. Gregoire to move
forward with the proposed legislative and agency action, to bring this new water management regime
into reality.
Paid Advertisement
Richard S. Davis
Pay or Play Destroys Jobs
R
RICHARD S. DAVIS
PRESIDENT
WASHINGTON
RESEARCH COUNCIL
18
WASHINGTONBUSINESS
eform movements require villains. Without
Enron and soft money bagmen, SarbanesOxley and McCain-Feingold would simply be
hyphenated odd couples. With villains, real or
imagined, they became the law of the land,
complete with heavy-handed and unintended
consequences.
Backers of the latest “pay-or-play” health care
dodge have slapped a black hat on the Wal-Mart
smiley face and painted a bull’s-eye on its back.
Unions and some less successful competitors have
labored diligently to demonize the retail giant.
Now, they hope to leverage those efforts to win
legislation dictating health care spending by large
businesses, fundamentally altering labor relations.
A group called Americans for Health Care
fronts for the union-backed campaign. They want
to force employers to pay a fixed share of their
payroll for health care or pay the difference into a
state health care fund. “Fair Share Health
Care”—the rhyme makes for a nice chant—got a
boost when Maryland legislators required businesses with more than 10,000 employees to pay 8
percent toward health care. In January,
Maryland’s Democratic legislature overrode the
Republican governor’s veto of the scheme. Only
Wal-Mart will be affected.
Well, Wal-Mart and the community of Princess
Anne, Maryland, which had hoped for an 800job Wal-Mart distribution center, are now put at
risk. As local hardware store owner Sherry Harris
told the Baltimore Sun, “$12 an hour to start
looks really good to a lot of people.”
Similar measures have been introduced in some
30 states. In highly-unionized New Jersey, supporters want to mandate a whopping 15 percent
of payroll. And the definition of a “large” varies
from 10,000 employees in Maryland to 1,000 in
Rhode Island. It doesn’t matter. Once they’ve
established the precedent, advocates will quickly
move to expand the number of businesses affected and the costs will rise.
A more complicated pay-or-play plan in
Washington failed to get traction in 2005. The
Washington Research Council found the proposal,
reaching businesses with as few as 50 employees,
would have eliminated 17,000 jobs. Supporters
came back in 2006 with a modified Maryland
plan, targeting firms with more than 5,000 workers and setting the tax at 9 percent of payroll.
Pay-or-play advocates claim to be fighting a
“race to the bottom” in employer-based health
insurance. Leaked and unverifiable data identified
large businesses, including Wal-Mart, with
employees receiving state assistance for themselves or their dependents. That’s hardly surprising for public and private employers hiring entrylevel, part-time, and low-skilled workers.
Destroying those jobs with expensive mandates
does neither the worker nor the taxpayer any
favor. While it ignores basic health care reforms
aimed at cost control, the Maryland plan hamstrings American businesses in global competition. States adopting the plan send a negative
message to firms seeking to locate or expand.
There is no race to the bottom; there is, however, a race to rein in runaway health care expenses. Employers tailor their benefit plans to attract
and retain good workers. And employees match
their own interests with job opportunities. Health
insurance is one factor among many. Some workers place a higher value on flexible hours, the
opportunity to get work experience and develop
skills, a workplace close to home, or even just a
chance to get out of the house a few days a week.
With pay or play, employers lose the flexibility
they need to control health insurance premiums,
engage in cost sharing plans that increase
employee choice and responsibility, and invest in
wellness programs that cannot be credited
against the tax.
The unions have their own agenda. As the costly benefits won in past bargaining agreements
prove unsustainable, labor would like government to step in to secure them without negotiation. Pay or play paves the way.
In January, John Sweeny, president of the AFLCIO, told the National Press Club, the goal is
national health care plan. “But if they won’t give
us [one],” he said, “we will ‘give them hell’ in all
50 states.” The Oregon AFL-CIO filed an initiative to put its version of Fair Share hell on the ballot. A similar effort is likely in Washington.
While the target may be on Wal-Mart’s back,
the imagined villain is just a vehicle. If pay or play
prevails, few will be smiling.
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Points of View
Fair Share Part of National Union Push
N
REP. STEVE CONWAY
D-Tacoma
Editor’s Note:
Washington Business
Magazine asked Rep. Steve
Conway, D-Tacoma, to
write the opposing view on
the so-called “Wal-Mart”
bill, but he missed our
copy deadline. We delayed
sending the magazine to
the printer until the very
last second. What follows
was compiled by AWB
staff in an attempt to
demonstrate the opposing
point of view.
20
WASHINGTONBUSINESS
ationally, the AFL-CIO is pushing legislation requiring businesses to dedicate differing percentages of payroll for health care.
The legislation surfaced in 33 states and is
showing up in large cities and counties.
Since the new Maryland law and an ordinance in Suffolk County, New York, came into
being, they are being challenged in federal
courts by national retailer organizations who
claim they violate the Employee Retirement
Income Security Act of 1974. ERISA sets minimum standards for most voluntarily established pension and health plans to insure consistency in benefits for multi-state employers.
According to the AFL-CIO Web site: “In general, Fair Share Health Care legislation requires
large, profitable corporations to spend a certain
percentage of their payroll to provide health care
benefits for their employees or pay into a state
health care fund. Fair Share will reduce the price
taxpayers pay to cover profitable employers’
employee expenses, ease the financial strain states
face in growing Medicaid costs, and help level
the playing field between companies that provide
good jobs and benefits and those that don’t.”
Triggering Washington’s legislation were confidential documents leaked to the media. The
reports came from sensitive confidential employee data collected by the state from company files
and then sent to key legislators. The cover letter
on the documents specifically warned that unauthorized release could violate state and federal
law and carry with it fines of up to $5,000.
While promising to track down the unauthorized release of the information and punish the
offenders, at press time neither the governor’s
office nor the attorney general have gone public
with the results of their investigations or stated
what they would do to those violating the law.
According to The Seattle Times, the leaked
documents list 50 companies whose employees
received Basic Health Plan or Medicaid Benefits
in 2004.
The newspaper said Wal-Mart came out on
top of both lists, by wide margins. One report
shows that, throughout 2004, an average 3,180
Wal-Mart employees were receiving state-funded medical assistance, including Medicaid, for
themselves or for a dependent. The other report
shows that 456 Wal-Mart employees were on
the state’s Basic Health Plan that year. Some
employees may be counted on both of the lists.
In announcing the Washington legislation,
Rep. Steve Conway, D-Lakewood, chair of the
House Labor and Commerce Committee and
an official in the United Food and Commercial
Workers Union, Local 81, and Rep. Eileen
Cody, D-Seattle, chair of the Health Care
Committee and a founding member and former
treasurer of District 1199 Northwest Hospital
and Health Workers Union, SEIU, spoke to
The Seattle Times.
“I think taxpayers should be outraged,”
Conway said. “They [taxpayers] are subsidizing
one of the wealthiest corporations [Wal-Mart]
in the world.”
“It shows Wal-Mart isn’t even taking care of
its full-time employees,” Cody told the Times.
On the AFL-CIO Web site, she added: “Most
large employers do provide health care. The idea
here is to hold the ones who don’t accountable
so they are not undermining the structure of
those who do.” Cody sponsored the Fair Share
bill in Washington.
We are a targeted state. Legislation, which
died in the House, would have required companies with 5,000 or more employees to dedicate 9
percent of payroll to health care. Not included
in the 9 percent are costs for wellness programs.
Both Democratic Gov. Christine Gregoire and
House Speaker Frank Chopp, D-Seattle, spoke
before the unions in Olympia. Chopp, who killed
the bill, stated it was bad legislation and did little
to improve access to health care. Meanwhile the
governor told the rank and file that she will work
to perfect the legislation for 2007.
In Maryland, lawmakers overrode a gubernatorial veto and now employers with more than
10,000 workers must assign 8 percent of payroll
to health care, and in San Francisco there is a city
ordinance under consideration which would
require businesses with 20 workers or more,
including part-time workers who work more
than 80 hours a month, to provide a health
insurance plan that would cost $325 per month
for each worker. And, in Oregon, Tom
Chamberlain, president of the state’s AFL-CIO,
filed an initiative called Oregon Fair Share.
Points of View
Bad Public Policy Doesn’t Fix Problem
T
here are 46 million uninsured Americans,
many of whom live here in Washington.
We must find ways to make certain these people
have access to affordable health care and we
must do it now.
Sadly, the so-called “Fair Share Health Care”
legislation placed before lawmakers in
Olympia last month would not have addressed
the ballooning costs associated with providing
health care.
Instead of looking at the positive economic
impact and health care solutions companies
provide, the bill took a completely wrong-headed approach. It actually penalized employers
who offer health coverage to their employees by
mandating that they spend a randomly-determined percentage of payroll dollars on health
care. “Fair Share Health Care” measures simply
impose bad-for-business mandates on employers and send a loud-and-clear message to the
business community: “Don’t come here.”
To confuse people even further about this
misguided legislation, proponents leaked outdated and inflated public assistance numbers to
the press—a dubious act currently under investigation—about the bill’s primary target, WalMart. The secret list claimed that 20 percent of
Wal-Mart’s Washington associates received state
health care subsidies—a major factual error.
Where did this figure come from? No one
knows. The methodology behind the report was
questionable at best. We do not know how
Washington collected and compiled this list.
Ironically, a report released by the governor’s
office in late February shows that Washington
had about the same number of workers on
Medicaid in 2004 as Wal-Mart. So if singling
out employers based on an arbitrary number is
the answer to solving the nation’s health care
crisis, then proponents of “Fair Share” legislation need look no further than Washington’s
roster of state employees.
But forcing employers of any size to spend
a random percentage on health benefits isn’t
the answer.
Companies of all sizes across Washington are
dealing with spiraling health care costs. Instead of
using false statistics to push bad policy, lawmakers
should find real solutions to the health care crisis.
Wal-Mart supports an inclusive study to
find out who is really on public assistance. But
the data collection must be fair, comprehensive and accurate—unlike the bogus study
leaked to the media. The collection needs to
include all employers in the state. This is not
just a Wal-Mart problem. State and local governments, non-profits, and large and small
employers all struggle to pay for the increasing
costs of health care. Any legislation that
unfairly singles out one employer isn’t going to
fix this problem.
To disclose all the facts, it’s necessary to determine how long an individual has been on public assistance, how long they have been with
their current employer, whether they are full- or
part-time employees, and whether they are currently on public assistance. There may be cases
where employers are taking people off of
America’s uninsured list, like Wal-Mart is
doing.
Just last year, Wal-Mart created more than
125,000 jobs nationwide, many of them in
neighborhoods that desperately need jobs. And,
Wal-Mart actually helps take people off of
Medicaid. Seven percent of associates are on
Medicaid when they join Wal-Mart. Within
two years, that number drops to 3 percent. In
fact, Wal-Mart has helped more than 160,000
associates get off the rolls of the uninsured.
That’s because Wal-Mart is taking significant
steps to make our health benefits even more
affordable and accessible to the works we
employ. This year, Wal-Mart introduced a new
Value Plan. Now both full- and part-time associates can access health coverage for as little as
$23 per month for individuals and 50 cents per
day for children. We are also significantly reducing the health care waiting period for part-time
Wal-Mart associates. And children of part-time
associates will become eligible for health coverage as soon as the parent becomes eligible.
Affordable health care is a challenge facing
every state and every business in the country.
Legislators should work together with business
and community leaders to bring create real
solutions to this problem.
The people of Washington are counting on
them to do so.
JENNIFER HOLDER
Wal-Mart Public Affairs
Spokesperson for
Washington, Oregon
and Alaska
MARCH 2006
21
Q&A
Health Care Takes a Bigger Bite
Q
What is the Health Care Authority and what is
its role?
A The
STEVE HILL
Administrator
Basic Health Care
Authority
Steve Hill was appointed
Administrator of the
Washington State Health
Care Authority in April
2005. A cabinet-level
agency, the HCA administers health care benefits to
more than 400,000
Washington residents
through the Basic Health
program for low-income
residents, and the Public
Employees Benefits Board
program for state government workers and retirees.
Combined, the two programs administer more
than $1.2 billion in benefits annually. The HCA
also administers the
Community Health
Services program that provides state funding to community clinics; the
Prescription Drug Program
(known as Rx Washington),
designed to reduce state
spending on drugs; and the
Uniform Medical Plan, a
preferred provider plan utilized by more than a third
of PEBB enrollees.
Health Care Authority, or HCA, is a
cabinet-level agency that is primarily a health care
purchaser for Washington state government. We
administer the Public Employees Benefits program
which provides coverage to state and higher
education employees, retired state employees, and
retired teachers. That’s about 300,000 people
including dependents. We also administer Basic
Health, which covers another 100,000 low-income
people. HCA will purchase more than $1 billion of
health care this year. There are several other
programs we also administer including the state’s
prescription drug program, and a program that
helps fund community clinics around the state.
Q
How large is the health care problem as it
relates to the state budget?
A In 2000, the state spent $2.7 billion from the
general fund; this year the health care spending will
be $4.5 billion. This increase of nearly $2 billion
means the share of the state budget going to health
care has increased from 22 percent in 2000 to 28
percent today, diverting $750 million a year away
from education, infrastructure and public safety.
Gov. Christine Gregoire continues to point out
that these trends are not sustainable. Revenue
growth is 3 percent while health care spending is
growing at a rate of 9 percent each year.
Q How
is the growth in health care costs
impacting families and businesses around the state?
A The story for families and business is the same
as for state government. Rapidly rising health care
costs are corrosive, they are creating a serious access
problem, destroying jobs, reducing wages, and
bankrupting families and businesses. The most
troubling aspect of this is that with all this
spending, we are not getting healthier. Americans
spend more than anyone on health care, but we lag
behind many other countries in the quality of care
we receive. The system is fraught with errors and
inefficiencies. Quality and efficiency problems are
driving up costs, which in turn, price employers
and families out of health care coverage.
Q
What are some ways to control the growth in
health care expenses to the state?
22
WASHINGTONBUSINESS
A The
governor has put forward a five-point
strategy for improving health care. First, we need to
encourage that the right procedures are used to
make people better. The buzz phrase is “evidencebased medicine,” but the bottom line is using
procedures that work and do not harm people. The
Institute of Medicine estimates that 20 to 30
percent of health expenditures do not improve
health or extend life. That means the state is
spending $1 billion per year on things that don’t
work. We want to change that.
Second, we need to preach some personal
responsibility and encourage people to make
healthy choices in their own lives, focusing on exercise, eating right and prevention.
Next, we need to focus on that portion of our
population that accounts for the biggest health care
costs. Five percent of the people account for 50
percent of health care costs. We’re talking about
chronic diseases like diabetes and heart disease. We
need to make sure that those who have these diseases are getting the most effective treatment, and
that those with the potential for these problems are
identified and treated early to prevent them from
becoming expensive patients.
The governor’s initiatives also encourage the use
of more information so consumers can make better
choices, and the use of information technology to
bring about more efficiency and better communication between health providers.
Q How do you put those ideas into practice to
save the state money?
A We’re going to incorporate those concepts into
our contracts with companies that provide health
care to our enrollees. When you add federal funding
to the $4.5 billion coming out of the state budget,
the government spends nearly $8 billion a year
purchasing health care for 1.3 million Washington
residents. We will provide incentives and other
encouragement for our contractors to incorporate
these principles into their delivery of health care.
King County is pushing similar ideas, as are major
employers like Starbucks, Boeing and Costco.
We can reduce the growth trends by only paying
for medical procedures that work, by getting our
people to make healthier choices, and by making
sure they have the tools to be smart health care
consumers.
The governor continues to make it clear that we
need to bring health spending back in line with
state revenue trends. But at the same
time, she is clear: We will not try to solve
this problem by kicking people off of
coverage or engaging in a Wrace to the
bottom.” We want to improve the quality of health care we provide to our
enrollees and increase access by making
health care more affordable. There are
already 600,000 people in this state without health insurance. We want to solve
this problem by improving the quality
and efficiency of health care delivery. We
want all Washington citizens to have
access to affordable coverage, starting
with covering all children by 2010. We
can make health care more affordable by
spending smarter and using the savings
to provide health care to more people
who need it.
Q How can the state deal with Medicaid
growth?
A
The state's Medicaid program is a
national leader in cost-containment,
including an emphasis on evidence-based
treatment—from reducing higher-risk
and ineffective types of surgery to an
expanded preferred drug list that steers
prescribers and patients toward lowercost drugs that are equally effective.
Under the leadership of DSHS, they are
moving toward increasing use of
electronic records, improved fiscal
integrity in billing and claims, and case
management that improves chronic care
at lower cost. These efforts save the state
millions of dollars each year despite the
continuing increase in overall health care
spending.
Q What role do you see for the state in
assisting small businesses with health
care? Are plans like those that AWB offers
in the solution mix?
A First, the state has to be a force for
making health care affordable. The HCA
was recently awarded a Robert Wood
Johnson Foundation grant to investigate
how we might offer alternative programs to
small businesses. As part of that project, we
have been holding focus groups with small
employers. The governor is keenly aware of
this problem and is asking us to propose
some alternatives in the spring. Some want
the state to provide a subsidy to help small
employers provide coverage. I believe this is
problematic given the state budget
situation, which is largely driven by rising
health expenditure. I think we would be
better served to work on improving the
health care delivery system and the
affordability of health care coverage.
Q Do mandates and tort costs impact
health care costs and availability? If so, in
what ways and what would the estimated
impacts be?
A Obviously
both areas play roles in
contributing to costs. I think the voters
showed great wisdom in rejecting both
malpractice initiatives last November.
They recognized that this is a complex
issue that needs to be addressed with a lot
more insight and a lot less rhetoric.
In the case of mandates, they can be
forces for both lowering and increasing
costs. They are not the primary force
behind rapidly rising health care costs
and are not as big a factor as the 20 to
30 percent spent on health care that
does not improve health. This administration is carefully watching proposals
for new mandates, asking that all of
these proposals go through the “sunrise”
review process called for by the
Legislature. After that review, we will
only support proposed mandates that
clearly improve quality and efficiency in
health care delivery. I think we should
be spending less time arguing about
mandates and more time making sure
we are spending health care dollars on
care that works—where there is evidence that the treatment or procedure
will improve health.
Q Are Health Savings Accounts working?
If not, how can they be changed to work?
A
HSAs are working. But they are not a
panacea. They will help bring more
consumer involvement to health care. But
they will not solve the coverage issues for
low income people, nor effectively deal
with the fact that 5 percent of us account
for 50 percent of health care dollars spent
each year. For expensive acute care and
chronic care, which is most of the
expenditure, HSAs will have limited
impact on quality or efficiency. Further,
for them to work, consumers will need
information on quality and efficiency of
providers and treatments.
MARCH 2006
23
Story and photo by Daniel Brunell
Healthy Employees Mean Health Care Savings for Employers
I
t’s funny to watch a movie with an office scene from the 1970s. Not
only for the ridiculous clothing that your kids now seem to find in style
but how almost everyone in the office smoked like a chimney. It is incomprehensible these days that we not only allowed smoking at the workplace
but our insurance wasn’t through the roof. Over the last 20 years, businesses have worked to decrease insurance costs through eliminating risks
such as smoking in the workplace and implementing the automation of
dangerous tasks. In order to further reduce health care costs, many companies in recent years have experimented with wellness programs.
The concept of a wellness program is simple. The more you encourage
your employees to make healthy decisions with their lives, the more
money you save on health insurance plans. This encompasses a wide
range of options. These range from company-sponsored sports teams, onsite employee fitness centers, employer-paid athletic club memberships,
rewards or surcharges for levels of fitness, mandatory medical checkups,
health and nutritional information classes for employees, relaxation training, preventive medicine workshops, assisting in helping employees quit
smoking, and even stress-management workshops.
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The overriding theme of many of these wellness programs is
education. The more that employees are aware of why they need
to make healthy decisions in their life, the more likely they will.
For example, if an employee is diagnosed with diabetes, a wellness
program can provide the materials, classes and support to educate
the employee about the do’s and don’ts of diabetes; thus saving
time and money in medical treatment. By getting people to make
the right decisions about their health, wellness programs benefit
both the employer and the employee.
One of the more recent examples of wellness programs is Group
Health Cooperative of Seattle. In February, Group Health’s CEO
Scott Armstrong and Medical Director Dr. Hugh Straley launched
Group Health’s own wellness initiative.
“We started this program because we wanted to assist our staff
to live healthier, more fruitful lives,” said Suzanne Swadener, manager of medical support services for Group Health. “We are working on four central core issues: decrease the use of tobacco, better
nutritional habits, weight management and stress management.
The goal of this program is not to force people into this, but show
them how to integrate healthy decisions into their lives.”
Group Health hopes that this program will develop into a model
which their members can use for their own wellness programs.
Another great advantage of these programs is that you don’t
have to be a big company to do any of this. Any company of any
size can take advantage of these programs to improve the health
of their employees and lower health care costs. Even though we
all can’t be like John Deere and install a full workout gym in our
headquarters, simple things like a health club membership, a
daily exercise time, classes in personal health, health-related
materials, and talking up the the need to eat healthy fruits and
vegetables are good basic things that small businesses can do to
install a wellness program.
Even with all the great advantages of these programs, some have
concerns. Many privacy advocates and civil libertarians are suspicious of the line being blurred between private lives and the workplace. Also, many are concerned about health-related screenings
being used to judge employment. In response, there is protection
under federal law which prohibits discriminating against workers
because of health status to delineate the problem.
Yet, the people who do participate in these programs have found
them a very rewarding experience. Many were already eating right
and exercising or were planning to go on a diet and get in shape
but have not found the time. These programs have also fostered
closer, more productive working environments. Plus, the wellness
programs have had a proven result in cutting absenteeism.
According to an April 1993 issue of Human Resources Executive,
Johnson and Johnson reduced their absenteeism rate by 15 percent within two years of introducing their wellness program. They
also cut their hospital costs by 34 percent after just three years.
Another company with a well established wellness program is
Boeing. Boeing has used the Internet as a facilitator with the Web
site, www.BoeingWellness.com. More than 82,000 employees
have registered to use the Web site for access to the Mayo Clinic's
online world of health information and wellness tools. About
48,000 learned more about their personal health by taking the
online Health Risk Assessment this past spring. More than 57,000
employees received a free flu shot in 2003. The Web portal also
contains tips on drugs and supplements, treatment decisions,
healthy living, and the different health programs and tools. You
can even ask a specialist about diseases and conditions.
As health care costs continue their meteoric rise and put the
squeeze on employers and employees alike, things like company
wellness programs and other measures provide some relief.
But, other reforms are needed as well. If we don’t change the
trend of health care costs rising faster than the U.S. gross domestic product, company-provided health care will go the way of the
typewriter, bell bottoms and the pet rock.
Improving Wellness
Wellness programs don’t have to be expensive or
complicated. Here are a few things you can do to
help improve the health of your employees:
• One of the most healthful things that you can do
for your employees is to give assistance and
provide incentives for them to stop smoking.
• The most subtle changes make the most
difference. Instead of coffee and doughnuts in
the morning, bring in fruit, yogurt and other lowfat options. Also, stocking the company
refrigerator with bottled water instead of soda
will make a difference in their health.
• Bring in workshops and day classes discussing
why it is important to exercises and eat right.
Providing materials such as information on flu
prevention, recipes on healthy eating, lowimpact exercises, and how to ask you doctor the
right questions are good, too.
• Give your employees the opportunity to work
out. A designated time during the day to go for a
walk or go to the gym are popular with some
companies. And, employer-paid gym or club
memberships give your employee one less
excuse.
• It is as important for employers to be as well
informed about diseases and illnesses as the
person afflicted. Make sure you understand how
to work company activities around this so the
employee doesn’t feel different or left out.
• Most importantly, make sure your employees get
medical checkups on a regular basis. Going to
the doctor is the key to long-term health so
anything wrong can be caught early. Also, it will
provide hard evidence to back up the
effectiveness of your wellness program.
MARCH 2006
25
-Based Medicine
Evidence
Merging Patient Care With Technology in the Information Age
by Ron Dalby
F
or a little more than a dozen years, “evidence-based medicine”
has been one of the new buzzwords—or phrases—in medical
circles. The term was coined in the early 1990s at McMaster
University in Ontario, Canada, by a group of clinicians and epidemiologists. It has not yet gained universal acceptance by medical practitioners. Perhaps the biggest complaint is that it is just
too cumbersome to integrate into an existing medical practice.
Using Evidence-Based Medicine
In one sense, your doctor has always used a form of evidencebased medicine to determine treatment for an injury or illness. He
or she listened to your tale of woe, perhaps ordered one or more
tests in the lab or diagnostic images, and poked and prodded as
you sat on the examining table. All of these things provided your
doctor with information, or evidence, if you will. From this a diagnosis was derived and a regimen of treatment was prescribed. That
treatment might involve medications, a change in lifestyle, surgery
or other options. On occasion, if you really confused your physician, he or she might leave you sitting in the exam room for a brief
period to quickly look something up in a medical journal or other
reference.
Particularly if your doctor ran out of the room to do a moment’s
worth of research, he or she was at least operating on the fringes
of what is today called evidence-based medicine.
According to the Centre for Evidence-Based Medicine
(www.cebm.net), “Evidence-based medicine is the conscientious,
explicit and judicious use of current best evidence in making decisions about the care of individual patients.”
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McGill University, in their pre-med curriculum, goes further,
saying: “Evidence-based medicine can be viewed as a process consisting of four core skills, including:
• Formulating focused and answerable clinical questions
born out of the uncertainty that arises in the diagnosis
and management of patients.
• Searching for best evidence through the selection and
efficient navigation of online resources that can address
the question.
• Critical appraisal (validity of research methods, strength
of results, applicability) of the research evidence
retrieved.
• As viewed through the perspective of patient values and
the clinical context, integrate best evidence into decision-making as it pertains to the evaluation, care and
education of patients.”
The Medical Journal of Australia simplifies these four concepts:
•
•
•
•
Asking answerable questions.
Accessing the best information.
Appraising the information for validity and relevance.
Applying the information to patient care.
Perhaps the key phrase in all of these defining concepts is the
term “best evidence” in the original definition. While all facts
gathered by your doctor in relationship to your illness or injury
can be considered evidence, some facts—or items of evidence—
are likely to be of higher quality or more important than others.
Thus the concept behind evidence-based medicine is that your
physician makes decisions based on the best evidence of the potentially thousands of pieces of information that may in some way
pertain to your situation.
The problem becomes one of determining which pieces of evidence are best for any given patient. And it is very possible that
what is best for one patient is not necessarily best for another
patient facing a similar malady.
Photo courtesy of Epocrates
Researching Best Evidence
Dr. David Sackett, who wrote the original definition of evidence-based medicine given above, added a second sentence to
the definition which is not used as often. It states, “It means
integrating individual clinical expertise with the best available
external clinical evidence from systematic research.” [emphasis
added]
The biggest problem with research is the sheer volume of information available. By way of example, enter the phrase “evidencebased medicine” into the online search engine Google and you’ll
get more than 8 million hits.
In regards to this wealth of information, the Medical Journal of
Australia recently reported on a 1989 survey of 625 primary-care
physicians and 100 physician opinion leaders in the United States.
Some 65 percent of these doctors claimed then that the current
volume of scientific information was unmanageable. When asked
about recent medical advances, these same doctors demonstrated
deficiencies that would affect patient care. And—here’s the kicker—in the 17 years since this study was made, total biomedical
knowledge has increased by a factor of 50 percent or more.
Three-quarters or more of Australian physicians surveyed listed
either insufficient time, limited research skills or limited access to
evidence as reasons for not making full use of the best research
data available.
With the growing use of the Internet in almost all fields of
endeavor, the needed information is out there and available. Thus
lack of time and poor research skills become the critical problems.
Many, perhaps most, doctors are unwilling or perhaps feel unable
to leave a patient sitting in an exam room while they access the
Internet for online information pertinent to the case at hand.
This problem does, however, seem to be slowly evolving. More
and more physicians are actually putting computers into exam
rooms with Web sites appropriate to their practices listed under
“Favorites” for quick and easy access. Thus they can access information within seconds and with the patient available in the room
in case additional questions arise. The growing use of PDAs in the
hands of physicians also allows quick access to Internet-based
information—even while making rounds in a hospital.
Does It Work?
The Centre for Evidence-Based Medicine claims that population-based outcomes research has documented that patients
receiving evidence-based treatments have better outcomes than
those who don’t. They do, however, qualify this comment by noting that no such evidence is yet available from randomized trials
because no one has yet overcome the problems of sample size, contamination, blinding and long-term follow-up which these kinds
of trials require.
According to Wikipedia, a free online encyclopedia, critics of
evidence-based medicine are wont to claim that doctors who
employ it are more apt to make their decisions based on clinical
research with less attention paid to what is best for the patient.
That criticism aside, however, Wikipedia goes on to note that
evidence-based medicine is fast becoming the “gold standard” for
clinical practice and treatment and that it is most used when the
treatment regimen is a medication of some sort. Of all the treatment regimens available to doctors, the various drug therapies are
the ones most likely to be adequately tested and reviewed simply
because anything involving the patient more directly is fraught
with opportunities for errors.
More and more medical
professionals are using
either computers or PDAs
to access information as
part of their diagnosis and
treatment processes.
Costs
Evidence-based medicine is not necessarily a means of cutting
costs. It is only a method of looking for the most effective ways to
treat patients—to improve both the quality and quantity of their
lives, according to the General Practice Notebook, a United
Kingdom medical encyclopedia on the World Wide Web
(www.gpnotebook.co.uk). In fact, depending on what a doctor’s
research uncovers, the cost of treatment might actually go up.
MARCH 2006
27
Individual Insurance Market Resurrected
by Paul Schlienz
W
ashington’s individual health insurance market is back after
nearly being regulated out of existence. The market’s comeback, however, has been slow and arduous. While individual
health insurance is now available throughout the state, and there
are an increasing number of plans and options, the market is currently dominated by three carriers. In contrast, other states have
healthy individual insurance markets at much lower cost with
many more providers.
Washington’s market was like that, too, until 1993, when the
state’s Legislature passed a far-reaching measure called the
Washington Health Services Act. Signed into law by then-Gov. Mike
Lowry, this measure put insurers under strict regulations, including:
• A requirement to offer a basic health plan covering a set
of benefits mandated by state government.
• Restrictions on premium variations.
• A prohibition on more than annual insurance adjustments except when the insured’s family composition or
choice of benefits changed, or if laws were passed that
affected premiums.
• Allowing insurers to exclude coverage of preexisting conditions only for 90 days prior to the date the insurance
coverage would go into effect.
• Giving the Department of Insurance authority to
approve or disapprove all insurance-related regulatory
actions, including rate increases, benefit designs and
community ratings.
In 1994, Insurance Commissioner Debra Senn announced a
three-month open enrollment period when any of Washington’s
600,000 uninsured could apply for individual insurance policies
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WASHINGTONBUSINESS
with state mandated rates. Thousands of state residents responded by
signing up for insurance policies, although the mechanism for costsharing was not yet in place. Then everything collapsed.
Good Intentions Gone Bad
Congress, in 1995, refused to allow 1.4 million Washington
residents, whose employers were insured under the federal
Employee Retirement Income Security Act, to participate in the
state’s insurance cost-sharing program. Then the Legislature
repealed most of WHSA’s cost-sharing provisions, but did not
repeal mandates on open enrollment, guaranteed issue and community ratings.
Soaring enrollments of frequently high-risk policy holders and
limited ability to absorb the costs devastated Washington’s insurance providers. Pierce County Medical, paying around $1 million
a month more in claims against individual policies than it was
receiving in premiums, raised it rates by 67 percent. At the same
time, Principal Mutual had a deficit of about $12 million between
its Washington claims and premiums—twice the average cost of
claims elsewhere in the United States.
The results were devastating for Washington’s individual market. Costs rose, premiums increased by double digits, enrollment declined, plans offered increasingly less coverage, and
insurance providers packed up and left the state’s individual
market en masse. Indeed, by 1999, individuals and families in
32 of Washington’s 39 counties were without individual health
insurance options. Ironically, in view of WSHA supporters’
hope that it would lead to nearly universal health insurance coverage, roughly 11 percent of Washington’s population—the
same percentage that was uninsured before WSHA—remained
uninsured.
In 2000, then-Gov. Gary Locke signed legislation designed to
help bring back Washington’s individual insurance market.
Insurers were allowed to return to risk-based underwriting; the
insurance commissioner was no longer allowed to set rates,
although providers were required to document a loss of money on
claims before rate increases would be approved; insurers were
allowed to exclude coverage for preexisting conditions for up to
nine months; and employees who lost jobs through no fault of
their own were allowed government health insurance after all
other insurance sources were exhausted.
The Individual Market Returns
These reforms have helped bring back Washington’s individual
health care market. In contrast to the dire situation that existed six
years ago, there are at least two individual health insurance
providers operating in each of Washington’s counties. Since 2000,
Premera BlueCross, one of the state’s major carriers, has seen an 80
percent increase in individual enrollment, which is just below 18
percent of the total health insurance marketplace.
Nevertheless, the ill effects of the WHSA linger on.
“A lot of national carriers look at this state and ask ‘Do we want
to make an investment in selling and marketing a product in this
state where every three or four or five years the Legislature makes
changes to the marketplace that either might make it advantageous or less advantageous to do business in Washington?” Jack
McRae, of Premera BlueCross, said.
While premium costs have gone down considerably since
2000—$60 per month is the approximate average for individual
plans—the state has continued to pile mandates on to health
plans, which raise costs. And the requirements that Washington
puts on insurers are heavier than almost any other state.
Among the cost drivers in Washington’s individual insurance
market are regulations that prevent insurers from denying coverage, a prohibition against variations in insurance costs, and ratings
laws that force healthier people to subsidize those who are less
healthy.
“It sometimes seems like we want to make the whole system
fail,” Rep. Barbara Bailey, R-Oak Harbor, remarked. “Wouldn’t it
be better if we had very affordable prices in the health insurance
marketplace that allowed those people who are uninsured right
now to be able to afford their insurance without having to go to
the state and receive subsidies?”
Nevertheless, Washington’s individual market is back and is
starting to offer some very innovative products, including health
savings accounts, which combine a high deductible health care
plan with an individual savings account with a financial institution. In the view of an increasing number of policy makers, HSAs
hold great promise in bringing down health costs. Already, HSAs,
which have only existed since 2004, have seen costs decreased by
4 percent per year while standard plans have been increasing by 7
to 9 percent per year.
Despite the state’s disastrous 1990s health care experiment,
Washington’s individual market is literally back from the grave.
Barring any unforeseen state interference, Premera BlueCross’s
McRae remains optimistic about the market’s prospects for the
future.
“If you give the market a chance to work, you will see innovation,” McRae concluded.
MARCH 2006
29
Covering More of the Uninsured
R
emember the famed Harry and Louise TV ads extolling the
ills of “government run” health care? They cleverly dashed
Hillary Clinton’s grand scheme to force all employers to provide a
uniform health care plan for their workers and families.
Clinton’s prototype was hatched right here in Washington and
eventually led to the advent of association health plans.
In 1993, our newly-elected governor, Mike Lowry, pushed his
fellow Democrats who controlled the Legislature to overhaul health
care. Interestingly, the labor unions didn’t like Lowry’s approach
and had the Legislature carve them out. It seemed their health care
benefits were better than those authorized by the Legislature.
Unions Opted Out
That was a minor fender bender compared to the wreck awaiting Lowry in his old stomping ground—Congress.
Washington’s landmark law needed an exemption from the
Employee Retirement Income Security Act of 1974 to implement
the so-called “employer mandate.” ERISA insures that all pension
and health plans are consistent regardless of where a worker may
be employed. Since our state’s new standard health insurance plan
was not consistent with other states, the 1993 reforms hit a wall.
Frustrated by Congress’s thwarting of the 1993 reforms, Lowry
pulled together a group to find ways to help employers cover more
workers. Included in that group was AWB President Don Brunell,
who had been involved in health care since 1986.
“We knew that a government-run, single-payer model drew our
opposition and mandatory employer-provided health insurance
was a dog that wouldn’t hunt, so we convinced Lowry to try a
renewed market-based approach,” Brunell said. “We developed
association plans so organizations like AWB could aggregate small
businesses to drive large purchaser discounts.”
AWB then began its HealthChoice program, one of the key
membership benefits.
In the beginning, HealthChoice was an “employee-based” program where a small business (two to 50 workers) could offer their
workers and families a dozen choices.
“Our goal was to allow them to chose the plan which best fit them
and their families,” Debra Brown, AWB’s senior vice president of
member services said. Brown coordinates member services, which
include health insurance and workers’ comp retrospective rating.
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In the original program, there were four insurers offering three
plans—a high- and low-cost point of service and an HMO. The program produced immediate results. Nearly half of the small businesses joining HealthChoice had not offered health insurance before and
the size of companies quickly dropped from 13 to nine employees.
“We kept our promise to cover more of the uninsured,”
Brunell added.
In the late 1990s, many carriers withdrew from Washington. That
forced AWB to switch to an “employer-choice” framework similar to
our competitors, and Premera became the HealthChoice insurer.
Today, HealthChoice has five insurance plans with deductibles
ranging from $250 to $1,500. Recently, AWB added three Health
Savings Accounts to the mix with deductibles ranging from
$1,250 to $2,500.
AWB Insurance Covers 16,000 People
HealthChoice now serves 2,000 employers covering nearly
16,000 workers and their dependents. The average size company
on the plan is five workers and 45 percent of the businesses are
offering health insurance for the first time.
Recently, more insurers started selling association plans. Along
with Premera, Regence, Aetna and Pacificare compete with
HealthChoice.
“Free market competition is what we want,” Brunell said.
“People need choices of insurers and products. We believe that
consumers, not government, should dictate the marketplace.”
Congress is also considering national association health plans
which would be free of most state-mandated coverage. While those
plans present problems in heavily regulated states like Washington,
they offer a new opportunity to cover more of the uninsured.
AWB pushed similar plans in Washington, which would only
include a list of essential benefits, but would allow insurers to
incorporate optional coverage for others. For example, mammography would be mandated in every plan, while obstetrics would be
added for women of child-bearing years.
In the end, allowing associations like AWB to tailor health
insurance and people to make purchasing decisions is what will
drive health care costs down, Brunell concluded. Association plans
like HealthChoice are working and allow employers to offer
affordable health care coverage for their workers and families.
Policy
Bringing Individual Responsibility
Back to Health Care
H
ealth savings accounts are an intriguing
response to rising health care costs. While
they’re not for everyone, many consumers are
discovering their usefulness.
HSAs have only been around since 2004, one
year after they were first authorized by the U.S.
Congress as part of a Medicare reform package.
Each HSA has a high deductible health plan
and a tax-exempt account with a financial institution that allows you to save for health care
expenses. Much like an individual retirement
account, contributions to and income earned in
an HSA are 100 percent tax free. HSA holders
get tax reductions while paying affordable premiums. Thus HSAs provide reliable insurance
protection while decreasing out-of-pocket
expenses. Also, like an IRA, you can withdraw
unused funds from an HSA for non-medical
reasons without penalty when you turn 65,
although you will be liable for income tax.
HSAs have real benefits if you find yourself
unemployed or temporarily laid off. The
money you put into an HSA remains there
until you spend it, may be used to pay COBRA
or other medical insurance premiums or rolled
over to the next year if it is not used within a
one year period.
While HSAs have much to recommend them,
they are not a panacea for all health care needs.
“People with a high utilization of medical
services—for example, a parent of an epileptic
child and Dilantin expenses—and those who
are not in a position to fund the deductible with
tax free cash probably should not look at an
HSA,” Jim McGregor, of McGregor Insurance
in Anacortes, said.
Otherwise, HSAs are a viable health care
option for many consumers. In addition, this
innovative approach to health care shows great
promise in lowering health care costs. Because
HSAs have high deductibles, people on these
plans tend to spend their medical dollars more
carefully than those on traditional, employerpaid medical plans with low deductibles, thus
helping to lower demand on medical services
and bringing down expenses.
“When we buy car insurance, we don’t buy it
expecting it to pay for an oil change or tire rotation, but when it comes to medical plans, all
that thinking goes out the window,” McGregor
added. “When it’s an employee benefit, you
want the best plan you can get, but when you
add employee cost-share into the premium, all
of a sudden you want to make sure what you’re
spending is cost effective.”
Currently, HSA costs are decreasing at a rate
of 4 percent per year while standard health
insurance plans have been increasing by 7 to 9
percent per year. Oddly, in view of these cost
savings, Washington state employees are still
unable to open health savings accounts.
“State employees are the only group in the
state who can’t have an HSA, and the time has
come for them to be given this opportunity,”
remarked Rep. Cary Condotta, R-East
Wenatchee, who introduced a bill during the
2006 legislative session to allow state employees
to utilize the HSA option. Despite the support
of Washington’s Health Care Authority, this
measure was not approved by the Legislature.
This issue, however, will not go away.
“We have gone from personal responsibility to
employer responsibility to state responsibility in
health care,” Rep. Barbara Bailey, R-Oak Harbor,
another key supporter of HSAs, said. “We have
to get back to individual responsibility.”
by Paul Schlienz
“Because HSAs
have high
deductibles,
people on these
plans tend to
spend their
medical dollars
more carefully ... “
Interested in learning more about HSAs?
AWB’s Debra Brown will be happy to give you
the details on an HSA that is available for AWB
members.Contact her at (360) 943-1600 or
DebraB@awb.org.
MARCH 2006
31
ERGONOMICS
Not as Bad as You Think
by Daniel Brunell
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E
rgonomics once struck fear into the hearts of employers.
The feeling that ergonomics is an unknown and arbitrary science led many within the business community
to fear it. But a new understanding of ergonomics has
been used to prevent musculoskeletal disorders and other health
conditions related to the jobs people do. Ergonomics also helps
improve employee comfort, morale, productivity and quality.
Since ergonomics came on the scene in the early 1990s, some
feared that it would lead to an explosion of frivolous injury claims
and lawsuits. However, since 1994, the rate of injury claims has
slowed. Several factors are involved. “Automation has really
helped in bringing down claims,” said Peregrin Spielholz, a prevention analyst for the Washington Department of Labor and
Industries. “Also, employers are more aware and better educated
about the issue.”
Much of this awareness has come from educating companies
about ergonomics. L&I has an exhaustive database and expert
knowledge in this field and has helped hundreds of businesses find
solutions for their employees. Groups such as the Association of
Washington Business, Associated General Contractors and the
Washington Restaurant Association have also held seminars and
assisted in research to help their members reduce the number of
repetitive motion and musculoskeletal injuries.
“These programs not only inform companies of dangers in their
workplace, but also have a positive long-term economic effect,
with fewer work days missed and lower rates on insurance,” said
Michael Foley, senior economist with L&I.
One of the most successful ergonomic solutions has been
implemented by Fluor Hanford at its cleanup of Hanford Nuclear
Reservation’s K-Basins near Richland, Wash. The basins are used
to store tens of thousands of irradiated fuel assemblies that once
comprised the cores of nuclear reactors. The spent fuel rods sit on
the bottom of giant pools holding more than a million gallons of
radioactive water. The basins are close to the Columbia River, posing a giant environmental risk to the entire region.
Fluor came to Hanford in 1996 to face the monumental task of
cleaning these basins. They found almost immediately they had
an ergonomics problem.
“Everything was oriented downward,” said Denise Brooks, an
occupational safety consultant with Fluor. Brooks is a 23-year veteran of commercial, nuclear and manufacturing industrial safety
programs. “People were leaning over rails, using very long-handled
tools, and performing repetitive actions in circumstances where
lighting was often positioned at odd angles relative to the worker.”
With a few inexpensive modifications to the tools, changing the
way equipment was positioned, and other minor tweaks, Fluor has
been able to lower its OSHA-recordable injury rate by more than
75 percent since 1996. The once-dangerous job of cleaning up
nuclear waste showed an average rate in 2003 of 4.0 recordable
injuries and illnesses for every 200,000 hours worked. This is very
favorable compared to the aerospace industry’s 3.6 rating and automotive manufacturing’s 10.2 rating. Boeing, UPS and Costco have
also successfully implemented ergonomic programs that improve
the health of their employees and lower insurance premiums.
You don’t have to be a big company to implement meaningful
ergonomic changes in the workplace. For free information about
ergonomic solutions, contact L&I at (800) 547-8367 or visit their
Web site at www.lni.wa.gov.
MARCH 2006
33
10 Solutions for Improving Ergonomics in the Workplace
1. Educate and involve employees. They are the experts when
it comes to their jobs. Employees are often the best source for
identifying problems. They may have a solution to offer, as
well. Educating employees on ergonomics helps them to offer
more meaningful suggestions and feel that they are a part of
the solution.
2. Take a look at all of the available data. Use your workers'
compensation claims data, OSHA 200 logs, safety committee
meetings, absenteeism and turnover records, employee
suggestions, and any other available data to identify
problems. Follow up by observing the jobs and talking to
employees and supervisors about problems.
3. Encourage early reporting. If employees feel comfortable
about coming forward early with symptoms of injury, you
can take care of the problem before it becomes a workers'
comp claim. The result is less pain and suffering for the
employee and cost savings for the employer.
4. Find quick fixes to get momentum going. Don't get
caught up in “analysis paralysis.” It's easy to start looking
at every little task and movement, but often there are
simple solutions that could be implemented quickly with
little analysis, like raising a computer or lowering a
countertop. Putting these solutions into place will
generate enthusiasm by demonstrating to employees,
supervisors and management how effective and simple
ergonomics can be.
5. Some problems are more complex than others. For some
work environment problems, a careful analysis is in order. By
keeping your options open at this stage, you often can find
alternative solutions to the problem that you would have
missed if you had moved too quickly.
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WASHINGTONBUSINESS
6. Eliminate the risk factors. Too often, businesses focus only
on solutions like training employees and rotating them in
and out of hazardous jobs. Training in proper work practices
is an important part of ergonomics and should accompany
any new equipment or procedures that are implemented.
Changes to work practices and equipment can reduce or
eliminate risk factors for injury. These can be as simple as
bending the knees when picking something up or adjusting a
keyboard.
7. Don't just throw money and equipment at the problem.
New equipment, such as a hoist, is often a good solution to
an ergonomics problem, but changing the way something is
done is often the most effective way to prevent injury.
8. Make ergonomics a part of purchasing and planning.
Equipment expense could mean reduced costs by making
equipment changes. Any equipment with a problem should
be replaced quickly with something designed to eliminate or
reduce the problem. Make sure that any worn-out equipment
is replaced with ergonomically-designed equipment.
9. Expect results, but be patient. Ergonomics tools and
practices keep workers healthy and increase productivity,
quality and employee morale. However, you shouldn't be
discouraged if results are not immediate. The important
thing is to consider all of the benefits when calculating your
return, not just reduced claims costs.
10. Ask for help. Ergonomics isn't rocket science; most
problems can be solved using in-house expertise. However,
there will always be a few problems that will be easier to solve
with a little help from someone with more experience. The
Department of Labor and Industries offers free workshops
and consultations in ergonomics for employers.
Perspective
GOP Leaders
Have Deep Roots
in Chambers
Rep. Richard DeBolt
Sen. Mike Hewitt
Many Lawmakers Started Their Careers as Local Chamber Executives
B
usiness people are often heard to complain: “If we only had
folks in Olympia who understood business, they would make
better decisions.” Rightly or wrongly, employers believe people
who sweat making payroll and paying the bills have a better sense
about the impact of taxes, fees and regulations on the citizenry and
economy.
Who better to fit that mold than a chamber of commerce
executive?
Washington’s new Republican leaders have experience in the
private sector and honed their leadership skills as local chamber of
commerce executives.
Mike Hewitt, the Senate’s new Republican leader, sold Hewitt
Distributorship, a beer and wine wholesale business he owned and
operated for 23 years in Walla Walla and then became executive
director of the Walla Walla Chamber of Commerce, an organization in which he’d been an active volunteer.
On the other hand, Richard DeBolt, the new House GOP
leader, was executive director of the Centralia-Chehalis Chamber
before taking a position with TransAlta, the Canadian company
which owns the Centralia steam and power plant. DeBolt is serving his fifth term from the 20th District which includes part of
south Olympia and Lewis County.
Both Hewitt and DeBolt come from districts which lean
Republican, but occasionally elect Democrats. For example, in
2000 Hewitt filed for the 16th District senate seat against the highranking incumbent Democrat, Valoria Loveland, and won by
2,057 votes. He was re-elected in 2004 by a two-to-one margin.
Hewitt Unseated Powerful Chairman
In the 20th, the last Democrat to occupy a legislative seat was
Sen. Gary Odegaard, a teacher at Centralia Community College.
Loveland, now Department of Agriculture director, came
from Pasco and a background of public employment. The longtime Franklin County Assessor won the open seat in 1993. She
rose quickly in the Democrat circles becoming the chair of the
coveted Ways and Means Committee—the powerful collection
of lawmakers who control how the state collects and spends our
tax dollars.
In the 16th, the political power base shifts between Walla Walla
on the east side and Pasco bordering the west. It is generally classified as a swing district even though half of registered voters live
in Republican leaning Walla Walla County.
That region, home to pioneer settler Dr. Marcus Whitman, who
is only one of two people with statutes in the state capitol, produced some of the state’s most influential politicians. Before
Loveland, Republican Jeannette Hayner was elected from Walla
Walla and served as Republican Leader from 1979 to 1993.
Knocking off Loveland would be no easy task. Hewitt would
have to siphon enough votes away from Pasco to build upon his
strong base in Walla Walla to win. He did and now has risen to
become the new Republican boss in the state’s senior legislative
chamber.
Hewitt, a past AWB Board member, was selected by his caucus
when Sen. Bill Finkbeiner, R-Kirkland, stepped down to finish his
masters degree.
DeBolt’s Power Base
Last fall, DeBolt replaced Rep. Bruce Chandler, R-Granger, as
House Republican leader. He’d served in that position in 2004.
In 2002 he was uncontested, but in 2004 he easily won by
13,000 votes.
Both have sterling AWB voting records and are not courted by
the AFL-CIO. They are Cornerstone winners with better than 90
percent AWB voting records. On the other hand, the AFL-CIO
rates Hewitt as a lifetime seven percent voter and DeBolt has 11
percent.
Hewitt and his wife, Cory, have a long record of community
involvement. They have two grown sons. DeBolt is a University of
Wyoming graduate, and he and his wife, Amy, have two young
children, Sophie and Austin.
MARCH 2006
35
Industry Profile
A Tough Bet
Non-Tribal Casinos Have the Deck Stacked Against Them
A
third straight “Blackjack!” was music to Jeff ’s ears while he
was playing 21 at a mini-casino in Auburn. Slightly ahead
for the night, he decided to meet up with some buddies
down the road at Muckleshoot Casino to have a cigar, dinner and
play some on the slot machines.
The hypothetical scenario above is all too real to non-tribal casinos that see their customers migrating to one of Washington’s 24
tribal casinos. The tribal facilities offer the freedom to smoke, the
ability to play more types of games, vast buffets and entertainment. In fact, one of the last places to smoke a cigar indoors is at
the Cabana Lounge at the Muckleshoot Casino.
A total of $1.7 billion in gross gambling revenue was generated
in 2005; almost a 300 percent increase since 1997 when legislation passed authorizing Nevada-style card games, such as
Blackjack, in commercial cardrooms. Since the law has been in
effect, more than 130 house-banked cardroom licenses have been
issued and 92 of these non-tribal casinos still operate throughout
the state.
Tribal versus Non-tribal
The size and scope of operations is the most noticeable difference between tribal and non-tribal casinos. Non-tribal, or minicasinos, are limited to 15 tables per establishment and wagers are
limited to $100. Meanwhile, tribal casinos operate up to 52 tables
with $500 wager limits. These facilities can also offer more games
such as Keno, Roulette, Craps and electronic “tribal lottery”
machines.
Adding salt to the wound, tribal casinos are not subject to initiatives passed in the state, or social engineering laws passed by
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WASHINGTONBUSINESS
the Legislature. When the statewide smoking ban passed last
November, the only places remaining that allow for smoking
were located on Indian reservations. Customers that previously
spent a few hundred dollars having dinner and a cigar at El
Gaucho or The Met had no choice but to spend those dollars
elsewhere.
The competitive discrepancies have Washington’s non-tribal
casinos concerned.
“The challenge that is unique and most problematic to the commercial gaming industry is the disparate standard between tribal
and non-tribal facilities,” PJ Pockets owner Steve Griffiths said.
“Tribal facilities offer higher betting limits, longer hours of operation, additional games and, most importantly, machine gaming.
“Non-tribal facilities are prohibited from offering any of these
amenities,” Griffiths continued. “Additionally, tribal casinos are
not subject to state laws such as the recent smoking ban which has
adversely affected many businesses, including commercial casinos.”
Griffiths is also president of the Recreational Gaming
Association, which is the association that represents the majority
of Washington’s commercial gaming establishments. He points
out that, “ ... since the introduction of machine gaming in the late
‘90s, tribal gaming operations have comprised a larger and larger
share of the overall gaming market until they now make up over
60 percent of all gaming activities in the state of Washington.”
Machine gaming or slots have played a crucial role with
increased market share wherever it has been present. According to
Washington's Cardroom Industry: A Fragile Recovery, a report issued
by the Washington Research Council.
The competitive position of the tribal casinos, however, has
improved with the introduction of slot machines. Slots are apt to
present a major competitive threat to the enhanced cardrooms. In
Nevada and Atlantic City, slot machines dominate the market,
showing a high degree of popularity with customers.
Based on that experience, cardroom operators may expect some
players to shift their gaming from card games to slots. As well, customers who continue to play blackjack may choose to play in casinos that also offer slots, either as an intermittent diversion or to
accompany companions who prefer slots.
“Imagine a grocery store that is not allowed to sell milk, eggs or
bread trying to compete with a superstore that carries all that and
more,” explains RGA Executive Director Dolores Chiechi. “The
private industry [non-tribal casinos] is operating Pong in an
X-Box 360 world.”
Free Ride on Taxes
Congress passed the Indian Gaming Regulatory Act in 1988,
which does not allow states to tax tribal gaming revenues.
However, states are allowed to negotiate a revenue-sharing agreement with tribes, which mostly include an exclusivity for machine
gaming.
“The tribes argue they are 100 percent taxed with their revenues
going to pay for tribal programs: health care, housing, infrastructure, etc.” Chiechi said. “However, tribal interests spent $6.1 million to defeat Initiative 892, which would have allowed the private
sector to operate electronic scratch ticket machines [slots].”
“These tax free dollars did not go back to the tribes,” she
continued.
Although Washington does not collect a gambling tax, it does
allow local governments to tax gambling receipts, up to 20 percent
of gross receipts (before expenses) for non-tribal cardrooms.
According to the RGA, the average mini-casino must pay 12 percent of gross income. Other types of gambling activity are taxed as
well, such as 10 percent for pull tabs and 5 percent for bingo.
The 20 percent tax on gross receipts for cardrooms is particularly high because these businesses are
also subject to business and occupation taxes on gross revenues. Add
the highest minimum wage in the
United States and the highest
unemployment taxes in the
country, and it is a wonder
how these mini-casinos
stay in business at all. In
fact, only 47 percent
of non-tribal casinos
reported making a
profit in 2004 business financial statements submitted to
the Washington
State Gambling
Commission.
“Mini-casinos are very
much like most small businesses,” Griffiths said. “They
face the challenges associated
with minimum-wage increases, the rising cost of health care, and
the burden of excessive taxation.”
Governments across Washington collected taxes on $881 million in receipts from licensed gambling establishments in 2005.
The biggest contributors to the public trough are cardrooms, $308
million in receipts or 35 percent, and pull tabs, $363 million in
receipts or 41 percent. Nothing was contributed by tribal casinos,
despite the fact that tribal gaming establishments generated more
than $1 billion in revenues in 2005 (61 percent of the overall gaming revenues in Washington). Actually, tribes only pay voluntary
community impact fees after they turn a profit.
“Since tribal casinos generate absolutely no taxes for the state of
Washington, it makes little sense allowing them to dominate this
market,” said Griffiths. “If Washington state is going to walk the
walk of making this state a truly business-friendly state, then
addressing these types of inequities is a good place to start.”
Trying to Save an Industry
Although cardroom gross receipts increased 13.5 percent in
2005, the majority of non-tribal casinos in the state continue to
lose money, according to the Washington State Gambling
Commission. Meanwhile, tribal casino revenue has jumped
from $422 million in 2001 to more than $1 billion in 2005.
WSGC reports that 2005 gross receipts from total non-tribal
gambling (includes lottery, bingo, cardrooms, pull tabs and
horse racing) is down more than $20 million from what they
were in 2001.
What can be done to even the playing field between tribal and
non-tribal gaming establishments?
“Treating all segments of the gaming industry the same:
Allowing everyone to compete on a level playing field,” Chiechi
answers. “A review of the local taxing structure for gambling—
many of the cities in which our members operate—receive more
in tax revenue than our members make in profit.”
Although many state and local lawmakers treat cardrooms as an
unwanted stepchild, they still serve a significant role in the state’s
economy. According to the Recreational Gaming Association, the
non-tribal house-banked cardroom industry provides
more than 10,000 living-wage jobs in
Washington at 92 locations.
“Washington legislators must create a business environment in
which commercial enterprises
can not only compete, but
have the opportunity to
thrive in direct competition with tribal gaming
facilities,” Griffiths
said. “Given the disparities between tribal
and non-tribal gaming entities, it will not
be long before commercial cardrooms and
charitable bingo are just
insignificant slivers of the
tribally-dominated gaming pie
chart.”
MARCH 2006
37
Community Profile
Taylor Shellfish Farms president Bill Taylor stands
amidst millions of recycled oyster shells that his
company uses during the production process.
Photo by Shawn Sullivan / AWB
Raymond:Bounty from the Sea
by Shawn Sullivan
U
nlike the vast expanse of agricultural producing lands of eastern Washington, the crops grown in the Willapa Bay area do
not need large quantities of top soil or fertilizer. The crops do not
need an abundance of sunshine to grow, nor do they need high
fences to keep wild animals out of the farm. What the farmers do
need for their crops are boats, dredges and mucking boots—all
necessities for oyster farming.
Taylor Shellfish Farms, one of the largest oyster farmers in
Raymond, entered the market eight years ago when it purchased
several beds from Weigert Brothers. “We entered the Raymond
market because we knew it was one of the best areas for oyster production,” Taylor Shellfish Farms President Bill Taylor said. “The
farms in Raymond yield between 15 and 20 million oysters each
year, which are then shipped to places around the world.”
Oyster farming almost became extinct through over-harvesting
in the late 1910s, but the transition to using Japanese oysters saved
the industry. “We started using Japanese oysters in the late 1920s
because of how well they reproduce,” Taylor said. Current oyster
farms take up more than 10,000 shoreline acres across Willapa Bay.
Oyster harvesting takes place when they are approximately three
years old and at all times throughout the year. “Most farmers use
a natural production cycle at the three week stage when larvae
attach themselves to recycled shells,” Taylor said. “After the larvae
attach themselves, we move the oysters into a bed where the tide
travels 12 vertical feet—the best height to grow oysters.”
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WASHINGTONBUSINESS
The continued success of the oyster farms relies on its ability to
transition with demand. “Recently, the demand for shucked oysters
has declined, while the demand for live oysters has increased dramatically,” Taylor said. Shucking is the process in which the farmers
remove the meat from the shell and flash freeze it prior to shipping.
Raymond is so immersed with the industry that even the local
Dairy Queen has an oyster burger on the menu.
Raymond also relies on the timber industry as a source of revenue and jobs. Two larger lumber mills operate within the city
limits. Weyerhaeuser operates one of its larger timber mills in
Raymond, while Seaport Lumber processes alder trees less than a
mile away. “The mills used to load timber onto large ships until
the state stopped dredging the bar,” Raymond Mayor Bob Jungar
said. “Both mills were put into the position of adapting to stay
alive, and both are still running today.”
Raymond’s attempt to create an image for itself became the
inspiration of several towns across the state. “We contacted a local
artist, and he created hundreds of steel statues for us to spread
around town,” Jungar said. “Other cities tried to duplicate it, but
so far no one has come close to matching us.”
With so much water surrounding the town, city officials have
instituted mandatory swimming lessons for every fourth grader.
“Our goal is to give every child graduating our high school the
ability to swim,” Jungar said. The local school holds the swimming classes at the public pool located in the center of town.
Despite the growing industries, Raymond’s population
remained stagnant until recently when Washington’s housing
boom filtered its way into the city. “We recently opened our fifth
bank,” Willapa Harbor Chamber of Commerce President Carol
Halsan said. “Why would they build five banks in such a small
community unless the banks see a lot of
people relocating here?”
Most of the people relocating to
Raymond are retirees looking for a relaxed
atmosphere. “We are setting up to be a
retirement community,” Halsan said.
“Raymond is full of so much beauty that
we are enticing several baby boomers.”
One of the reasons for recent growth in
the region comes from the availability of
existing structures. “We may have 3,000
people, but our infrastructure was built to
handle more than 6,000,” Jungar said.
“High-speed Internet is available because
we ran fiber-optic cable throughout town,
and we have several people in city government willing to work with developers wishing to relocate.”
City officials have tried everything from
exempting relocating companies from all future impact fees to
the abolition of the city’s business and occupation tax to draw
businesses into the city. “While it is tempting to place fees and
such on a developer when he is moving in, we realize how much
revenue the developer will generate in the long term,” Jungar
said. “In a community like ours, how often do you get the
opportunity to entice a company that will employ several hundred people?”
Another aspect of Raymond that may entice employers is the
addition of a Gray Harbor College satellite campus. “The local
college is ready and willing to develop training programs specific
to area businesses,” Jungar said. Grays Harbor’s willingness to
adapt may hold the key to the future of an employer’s success.
Being friendly to business is a significant
piece to Raymond, but activities available
after work hours has just as much draw.
“We also have one of the best golf courses
in the entire state,” Jungar said. “It is such
a well-kept secret that there is literally no
waiting time on the tee.” The nine-hole
course is located near several self-guided
walking tours that traverse through the base
of the Olympic Mountains to the hundreds
of miles of shore on the harbor.
With several miles of saltwater or freshwater to choose from, there is plenty of room
for private kayaking, fishing and boating
excursions. “Some of the best kayaking in
the entire Pacific Northwest is in Raymond,”
Jungar said. “The sport is growing so fast we
have a kayak rental shop on the way.”
Bird watching has become another fastgrowing trend in Raymond thanks to Audubon Washington’s The
Great Washington State Birding Trail. Two of the largest sections
of the trail center within the city limits of Raymond, which brings
thousands of visitors through the city each year.
Raymond’s laid-back environment may be just what the doctor
ordered for people wishing to escape the hustle and bustle of Puget
Sound. “I just enjoy relaxing here,” Jungar said. “I can’t help but
think to myself—I used to go on vacation to do this.”
Workers shuck oysters at Coast Seafoods in South Bend.
One out of every six oysters consumed in this country is
from Willapa Bay, making it one of the most productive
oyster areas in the world.
MARCH 2006
39
ORANGE JUICE
Made in Washington
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WASHINGTONBUSINESS
From an Unlikely Source
by Daniel Brunell
J
ust outside of Spokane, the snow is crisp. Snowplows work
overtime to clear ice-laden roads. In a large building near the
airport, 85 people in aprons and hair nets are bottling juice
from one of the few fruits that Washington doesn’t grow.
Orange juice? From the frozen tundra of Spokane? Yes! Spokane’s
Olympic Foods is the only major bottler of chilled orange juice in the
Northwest. They provide fresh orange juice and other chilled juice products to major supermarkets chains, local grocery stores, distributors and
public entities around the Northwest. Started in 1966 as Olympic Corn
Products, they started off making corn dogs. With only so much capacity
in the corn dog market, Olympic went looking for another venture to grow
the company.
In 1974, Olympic decided to venture into the juice market. The
risk proved successful. By 1979, making orange juice constituted
about 50 percent of the business. The market continued to grow
to where Olympic has had plant expansions in 1986, 1992 and
1999. In 1995, Westfarm Foods acquired a controlling interest in
the plant. One year later, Olympic stopped making corn dogs to
concentrate exclusively on orange juice and other products.
From the very beginning, Olympic has been dedicated to the
city of Spokane. The community has a high standard of living
and is easily affordable for hard-working families. Olympic
gives back to the community that has proved to be a stable
home for so many years. Most of Olympic Food’s employees
also give back to the community. One of the local programs that
Olympic contributes to is Second Harvest. Last year, Olympic
gave more than 300,000 pounds of food to Second Harvest and
other community organizations.
Spokane also serves as a centralized hub for Olympic Foods.
With a customer base that reaches through the 13 western states
and four western provinces of Canada, freight mobility is a vital
necessity for the company. Located within a mile of Interstate 90,
Olympic uses this main artery of the Northwest to receive materials and ship products across the region.
Yet, in late 2005, Olympic faced unprecedented challenges.
Even though Hurricanes Wilma and Katrina were thousands of
miles away, the effects of these disasters were felt in Spokane. In a
matter of days, the economic climate in which Olympic was operating dramatically changed. Hurricane Wilma’s aftermath left the
quality and quantity of the Florida orange crop in doubt, causing
a massive spike in costs for raw oranges.
In response, Olympic looked to different sources such as
California, Mexico and Brazil to keep the juice flowing. With
the advent of rapid transportation and ever increasing sophisti-
cation of the international marketplace, the world orange market has become integrated. Companies like Olympic have
merged into this new global competitiveness and bring benefits
to consumers such as fruit juices that were once impossible to
find because of seasonal constraints and market availability. As
Hurricane Wilma showed, this global focus also brings a more
robust economic model that can better cope with economic setbacks. However, Hurricane Wilma proved not to be the only
challenge for Olympic.
A few weeks later Hurricane Katrina struck, causing a massive
spike in already high oil and energy costs. In less than a week,
shipping and energy costs skyrocketed. The costs of the resin
beads used to make petroleum-based plastic bottles also rose.
These compounding factors led to some very nerve-wracking days
for Olympic Foods.
“We operate at very tight margins, so even the slightest change
in the market affects us a great deal,” said Doug Koffinke, president and CEO of Olympic Foods. “We try educating our customers about what the market is doing and how it is affecting
their product.”
Despite these recent bumps, Olympic processed in excess of 20
million gallons of juice between their two facilities. They were also
able to expand. Last year, Olympic Foods opened a new facility in
Fontana, Calif. “This helped us achieve several goals,” said
Koffinke. “First, it expands our customer base into the significant
California market. Second, it increases our production capacity to
include new products.” The new products are portion control
juices, juice concentrates and Tetra Brix aseptic juice boxes (think
kids’ lunch boxes).
With a new facility in California and a highly productive one in
Spokane, Olympic Foods has a bright future—as bright as the
orange juice that flows from Spokane.
MARCH 2006
41
Technology
Blackberry Alternatives:
A Smart Phone Arms Race
W
ith more than 3 million subscribers in the
United States, the
Blackberry, developed
by Canada’s Research
in Motion, Inc., has
become the primary
communications
tool for many business owners, executives
and sales professionals.
However, a recently-settled patent
infringement lawsuit against RIM has had
users on edge and looking for alternatives for years.
Other articles that attempt to present alternatives to the
Blackberry often miss focusing on two very important things:
1. The only true alternatives to the Blackberry have a QWERTY
keyboard and primarily function as a messaging device. Often,
non-tech savvy analysts regard the Blackberry as just another
smart phone. However, Blackberry users will be the first to tell
these people that their device isn’t just a smart phone. The
design lends itself to e-mail and messaging features first, and a
phone/personal digital assistant second.
2. The email capabilities must include support for Microsoft
Exchange server, or at least present potential e-mail
workarounds.
Three of the best devices are offered through the major wireless
carriers servicing Washington state—Verizon, Cingular, Qwest, TMobile, Sprint and Nextel.
T-Mobile’s SideKick
This device is often overlooked because it has been marketed
toward the younger generation and is touted as the “gadget of the
stars,” being used by Jessica Simpson, Paris Hilton and Nicole
Richie. However, Sidekick’s newer iterations are Internet/email/messaging powerhouses, providing as much if not more
functionality than the Blackberry, Treo and similar devices.
Through a wireless data network, Sidekick users can surf the web,
check e-mail, chat on AOL Instant Messenger or do phone text
messaging. There are synchronization tools that allow the Sidekick
to sync up with Macintosh or Windows-based computers for
address books and calendars.
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WASHINGTONBUSINESS
Although the Sidekick does not have the classic MS Exchange
capabilities of the Treo or Blackberry, there are reliable
workarounds that allow users to access work e-mail through the
device, including Exchange e-mail.
Palm Treo 650
Most companies’ network administrators will most likely opt
to move from the Blackberry to the Treo 650. It is not the
newest Treo available. However, it is the most proven model
from the Treo line and is offered by most of the wireless carriers. This device also offers true Microsoft Exchange support, so
integrating the Treo into most office networks should not present a problem.
The Treo 650 runs on the Palm operating system and can open
Microsoft Office documents, which should help with the product’s learning curve. The only complaint about the Treo line has
been low battery life, but this is a problem with most multi-functional “always on” communication devices.
Audiovox Pocket PC 6700
There are several different versions of the Pocket PC 6700 to
accommodate the requirements of different carriers, but the
features and capabilities are essentially the same. This innovative device offers Bluetooth support, Wi-Fi and a large, highresolution screen. Because it runs on a Microsoft-based operating system, it integrates well with Exchange servers and Office
applications. The 6700 also boasts a standby battery life of 200plus hours.
Another advantage the 6700 has over the Treo is the larger
QWERTY keyboard that slides out. Both the Sidekick and
6700 are far superior on the keyboard front. Many network
administrators prefer going with the Pocket PC operating system because of its easy integration into existing Windows-based
networks.
Regardless of which device a company chooses, any of these
should more than suffice as a solid replacement, or even upgrade
to the Blackberry. For people willing to carry two devices (one
phone and one messaging/PDA), the Sidekick or Pocket PC
6700 far outweigh the Treo in terms of messaging and Internet
features. For all-in-one device users, the Treo would likely be the
best alternative; although the 6700 and the Sidekick have solid
phones built in.
Fortunately, a resolution has been hashed out in the Blackberry
patent infringement lawsuit, so “Crackberry” users won’t have to
scramble for alternatives anytime soon.
People on the Move
Who’s in the News, Who’s on the Move
John D. Schanz has joined Comcast Cable as
executive vice president, National Engineering
and Technical Operations.
Jake
Bell
Cindy
Johnson
Cowlitz Bancorporation and its wholly-owned
subsidiary, Cowlitz Bank, has hired Gerald L.
Brickey as executive vice president and chief
financial officer.
Financial services veteran Patrick Yalung has
been named regional president for Wells Fargo’s
Community Banking in Washington.
Spokane-based Sterling Savings Bank has promoted David Brukardt to executive vice president.
Vancouver-based nLight announces that Jake
Bell has been promoted to vice president of
nLight’s newly-created Defense Business Group.
Conover Insurance in Kirkland announced that
Jill Keane was hired by its corporate office as
director of human resources.
Cindy Johnson has joined Group Health
Cooperative in Seattle as the new vice president
of human resources.
Garlic Jim's Franchise Corp. of Bellevue
announces the addition of Bart Hoemann as its
new chief financial officer.
Sands Costner & Associates, Gig Harbor, has
hired Sarah Munkres as an account executive.
She will assist with client project management,
public relations and account services.
Tim King was promoted to director of sales and
marketing for Crane Aerospace and Electronics
of Lynnwood.
Foster Pepper PLLC announced that associates
Laura McClellan, Robert A. Perez and
Carllene M. Placide have been elected members
of its Seattle office.
Sarah
Munkres
tary, and Clark Stare as past chair of its board.
New Vision (Yakima County Development
Association) has elected Ken Marble as chairman, Brian Roberts as vice chairman, Pete
Bansmer as treasurer, Robert Ozuna as secre-
Patrick
Yalung
Jill
Keane
Denise Tyree has joined HomeStreet Bank’s
Marysville mortgage team as a residential loan
officer.
Wayne Clemetson has joined Bank of Clark
County as vice president and business relationship officer.
Terry A. Krause has joined Group MacKenzie
as an architect.
Bart
Hoemann
Washington Business Directory
Printers
Pollard Group
4824 South Tacoma Way
Tacoma, WA 98409
Phone: (253) 473-7755 Fax: (253) 474-2805
www.pollardgroup.com
Professional / Statewide Organizations
Association of Washington Business
P.O. Box 658, Olympia, WA 98507-0658
Phone: (360) 943-1600 Fax: (360) 943-5811
www.awb.org
Publishing Companies
AQP Publishing Inc.
8537 Corbin Drive
Anchorage, AK 99507
Phone: (907) 562-9300 Fax: (907) 562-9311
www.aqppublishing.com
MARCH 2006
43
Member Profile
Canyon Creek Cabinet Co.
Making Fine Wood Cabinets the Old-Fashioned Way: One at a Time
Story and photos by Shawn Sullivan
O
ff the main road, tucked away in the midst of a large
industrial park in Monroe, stands what looks like a small
show room for custom-made cabinetry. Even as you
spend the first five minutes walking through the showroom,
Canyon Creek Cabinet Co. seems relatively small, but looks can
be deceiving.
Walking through a set of double doors, the true sense of Canyon
Creek’s size and ability finally hits home. Every cabinet produced is
different in some way, depending entirely on customer needs.
Canyon Creek started as Cascade Cabinets, a manufacturer of
low-cost cabinetry for builders and contractors in Washington.
But in 1996, new owners and a new management team transitioned the company into a state-of-the-art, highly flexible, custom
manufacturer of cabinetry that employs more than 670 people.
“We are one of those industries that nobody hears about that has
created 400 jobs in the last five to six years,” said Bill Weaver, president and chief executive officer of Canyon Creek.
The company created those jobs through its innovation and the
demand for quickly built, middle-priced cabinetry. “Our cabinet
business evolved into a fashion business,” Weaver said. “There are
over 20 standard colors to choose from, but we can do almost any
custom paint job in house.”
44
WASHINGTONBUSINESS
The key to Canyon’s ability to custom make any cabinet to the
customer’s specifications is a combination of highly-skilled
employees and a computerized system that tracks the order from
inception to final production.
“From the time we receive an order from one of our suppliers to
when we ship the product usually takes, with the longest wait
times, no more than five to six weeks,” Weaver said. Canyon
Creek can produce a custom-made cabinet in that time because
they make almost everything in-house.
“We are a fully integrated company,” Weaver said. “Most of the
machining, 80 percent of the cabinet doors, all of the painting,
and all of the finishing are done in our plant. We also have our
own trucking fleet and in-house accountants.” Once the plant
finalizes the production of a cabinet, Canyon can ship it anywhere
from Florida to Alaska. Most of Canyon Creek’s distributors are
located in the Pacific Northwest, but orders from places like New
York and Alaska are not all that uncommon.
“In a given year, we typically produce more than 250,000 cabinets, and we continue to grow at a rapid pace,” Weaver said. “Our
growth rate, during the last four years, remained at 15 percent.”
One of biggest reasons behind Canyon Creek’s success is their ability to change its production to fit trends in cabinetry designs.
“Seven years ago this industry changed into a fashion business,”
Weaver said. “Staying current on fashion trends in cabinetry manufacturing is one of our most difficult, yet rewarding, aspects of
our company,” Weaver said.
Canyon Creek stays current by using more than 20 standard
colors and diversifying its finishing techniques. “We have the ability to create any custom paint job for our customers,” Weaver
said. “Whether its distressing wood, creating bird pecks on the
finish, or putting a glaze on top of the cabinets ... if the contractor
can think of it, we can do it.”
Although Canyon Creek produces a substantial amount of cabinets each year, it is one of the most environmentally-conscious
companies within the industry. “We received numerous awards
and recognition for their achievements in environmental practices
and community contributions,” Weaver said. Canyon Creek has
received more than 14 awards in the past five years, and its products are manufactured using state-of-the-art environmental protection equipment that practically eliminates the environmental
effects of cabinet making. “Most of the awards we’ve won [were]
due to the nomination of regulatory agencies,” Weaver said.
“Most of them we didn’t even apply for.”
Canyon Creek outgrew its Maltby plant in 1997 and built a
new plant in Monroe. Canyon Creek completed the plant in
1998, but by 2004, they once again reached capacity. “We are
building an additional 45,000 square foot facility adjacent to our
current facility,” Weaver said. He expects to complete construction in February, but also expects to outgrow the new section of
the plant within a year or two. When construction is complete
and the company reaches its newly acquired capacity, Canyon
Creek estimates adding 50 more jobs, bringing the total to more
than 700 employees within the state.
“One of the most important things we have accomplished is
understanding who we are,” Weaver said. “While we always push
the bounds of who we are, we always stay within the framework
of knowing who we are.” Canyon Creek successfully transformed
a defunct manufacturing company into one of the largest custommade cabinetmakers in the country, with no signs of slowing
down in the near future.
Canyon Creek president Bill Weaver (facing page) sits in his
office surrounded by custom-made cabinets. Each piece of
Canyon Creek’s product is assembled by hand (above) after
each section is cut by an automated cutting system (below).
MARCH 2006
45
Profile
Gubby Barlow:
Bringing Health Care
Into the 21st Century
by AWB Staff
Tyler Boley Photography ©2006
and
personal
mission.
“Health insurance is highly
complex and analytical,”
Barlow said, “but in the final
analysis people buy health
insurance for one simple reason—peace of mind.”
Barlow took on a new
challenge when Premera
BlueCross recruited him as
its new chief financial officer
in 1997, following several
years of operating losses. He
was named chief operating officer three
weeks later, and president and chief executive officer in 2000—less than three
years after that.
“I accepted the offer to become CEO
of Premera because I care deeply about
this company, its mission, and the customers we serve,” Barlow said. “By 1999
we completed a financial turnaround. The
next challenge was to retool our products,
services, and technology to serve customers into the future.”
Beginning in 2000, Barlow decided to
bring the company into the 21st century
by leading a $125 million retooling of
Premera’s products, services and technology platform. “No company takes on a
complete system change without a high
degree of risk, and we certainly had that,”
Barlow said. The result was Premera’s
Dimensions suite of products and services, launched in 2002. Dimensions gives
Premera customers choices to manage
health care coverage and costs, flexibility
in selecting networks and benefits, secure
W
hen growing up in Bloemfontein,
South Africa, becoming the CEO
of a $3 billion dollar corporation was not
something H.R. Brereton “Gubby”
Barlow anticipated. He occupied himself
playing water polo and rugby and swam
for the swim team. “I know it’s hard to
believe, but I didn’t see a television until I
was 26 years old,” Barlow said.
He attended the University of Cape
Town and received his master’s of business
administration degree while working for
Deloitte & Touche in South Africa. While
working for Deloitte, Barlow immigrated
as a partner to the United States in 1987.
“Public accounting taught me to take an
enterprise view of every organization. You
quickly have to appreciate what drives a
business and focus the resources of the
company in the areas that matter most,”
Barlow said.
Barlow joined California-based Health
Net in 1991 as vice president of finance.
In healthcare finance, he discovered a
convergence between analytic challenge
46
WASHINGTONBUSINESS
and easy-to-use online services, and
around-the-clock access to information
that members, employers, physicians and
brokers can use. It also makes it possible
for the company to adapt quickly as the
market evolves.
Barlow didn’t stop there. Insurers typically convert all existing customers to a
new system automatically. Premera let the
market decide the value of Dimensions by
initially offering its new products side by
side with existing ones. “The response has
been gratifying,” Barlow said. Today,
more than 1.4 million Premera members
have enrolled themselves on Dimensions
products.
The market has changed dramatically
in the past several years, but Premera’s
mission remains steadfast, “to deliver
peace of mind to our members about
their health care coverage.”
“Today we’re very focused on two goals:
better health and more sustainable costs
for our members,” Barlow said. “As a company, we will contribute to those goals by
providing tools and resources members
can use to make more cost-conscious decisions. By supporting physicians and members in improving the quality of medical
care delivered. And by supporting our
members at every stage of health with programs and resources that help them manage their health cost-effectively.”
“Nobody can do that alone, but I am
optimistic about the long-term state of
healthcare and healthcare financing,”
Barlow said. “It’s optimism born of
necessity.”

AThe - Association of Washington Business

Transcription

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